Is the Stock Market About to Confirm a Breakout???
The S&P 500 pushed through a clear resistance level last week and is now looking like a reversal is about to happen. Will it be the confirmation test?
Breakout and Test
The most orderly type of breakout is when price pushes through a level and then comes back to test it, thus confirm that the prior resistance is now a support level.
Right now the S&P 500 is setting up to possibly do that. The reason I say it is setting up is because a bearish u-turn pattern has just formed. Anyone who reads my posts knows that u-turns are my favorite reversal signal.
So if indeed we are getting that reversal the first downside target is that prior resistance around 2810. If price were to hold there it would be a bullish action and one would have to let go of any bearish bias in the near-term, that includes me!
I am surprised that the market has been able to push higher, but that is why we watch and react accordingly because when it comes to markets - nothing has to happen no matter how much you believe.
I’m going to go with a false breakout and bull trap, then see the S&P trading back down between 2630 and 2680.
Or it won’t do that.
That’s my prediction.
Amazing indeed which is why I continue to steer clear of it. Too much going on behind the real market which normal retail investors will not be aware of so don’t care to be on the wrong side of it.
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I interpreted that S&P spike as an outlier and considered the resistance to have held. I'm anticipating a big market drop. Today will be an important watershed in that regard - we should have more certainty by the close of the markets on Friday.
Watch the 2900 level, it might be a bull trap.