US stocks ‘ddd..double top’? #SPX
Who needs to be original anyway? Let’s talk about the most widely followed market price in the word - the price of the S&P 500 index.
And let’s combine that discussion with one of the best-known technical analysis price patterns - the double top.
The textbooks say the double top is ‘completed’ when the price breaks below the first low- and to be clear, that hasn’t happened yet in the S&P.
What has happened is that the average price of the biggest 500 stocks in America just reversed for a second time at the 5700 level.
Not only that, it was the worst week of the year. We can see this as the big bearish engulfing candle on the weekly chart.
So in summary, the setup we get from the weekly chart is a big bearish engulfing week at resistance - that’s bearish.
On the 4 hour chart the trend has already turned lower. The first test for the new downtrend was 5500, that broke and now we are near 5400. Naturally 5300 would be next IF the downtrend resumes.
We don’t know if it will resume or not - we just know that the setup on the weekly chart is bearish and that tilts the probabilities in favour of a continuation lower.
Looking past the price action and to the possible mindset of the traders causing it, after a big weekly drop, there will be some traders trying to pick the bottom. That could create the kind of upward movement to set up opportunities to the short side below 5500 with 5300 as a possible target.
But that’s just what we think, do you agree or disagree?
Send us a message and let us know
Happy Trading!
Jasper, WeTrade Market Analyst and Founder of Trading Writers.
And let’s combine that discussion with one of the best-known technical analysis price patterns - the double top.
The textbooks say the double top is ‘completed’ when the price breaks below the first low- and to be clear, that hasn’t happened yet in the S&P.
What has happened is that the average price of the biggest 500 stocks in America just reversed for a second time at the 5700 level.
Not only that, it was the worst week of the year. We can see this as the big bearish engulfing candle on the weekly chart.
So in summary, the setup we get from the weekly chart is a big bearish engulfing week at resistance - that’s bearish.
On the 4 hour chart the trend has already turned lower. The first test for the new downtrend was 5500, that broke and now we are near 5400. Naturally 5300 would be next IF the downtrend resumes.
We don’t know if it will resume or not - we just know that the setup on the weekly chart is bearish and that tilts the probabilities in favour of a continuation lower.
Looking past the price action and to the possible mindset of the traders causing it, after a big weekly drop, there will be some traders trying to pick the bottom. That could create the kind of upward movement to set up opportunities to the short side below 5500 with 5300 as a possible target.
But that’s just what we think, do you agree or disagree?
Send us a message and let us know
Happy Trading!
Jasper, WeTrade Market Analyst and Founder of Trading Writers.
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