In our previous blog post, we mentioned scenarios looking at both the bull and bear side of things. We recommend reading out initial blog post to better understand this one.....
https://visionaryassets201.wixsite.com/visionaryfinance/blog/s-p-500-dipping-below-key-levels-today-crypto-action
What is a "Bull Trap"? A Bull Trap is simply false indication that a downward trend has ended in an index (S&P 500). The thought is the selloff is over when in fact the index continues to go down. Are we seeing that with the S&P 500?
We were watching the $SPX closely as it was approaching a critical level in our opinion @ $2670. It recently rejected the level if you go about 6-7 candlesticks back. We saw upward momentum as of recent following the downward pressure/volatility we have witnessed in 2018 so far. With that upward momo we saw last Tuesday, Wednesday and Thursday, many thought this could be the start of the S&P 500 reversal. We try to ignore the hype within the environment and instead focus on technical analysis. Many were buying the 3 day rally, but we instead sat on the sidelines until we could identify whether or not that $2670 level was going to be accepted. Friday was a strong rejection in our opinion dipping below $2604 levels. As you can see from the chart, we have outlined the $2539 support level that we thing the S&P 500 could test on the downside. The S&P continued to retrace back to the $2604 levels showing there is not strong upside right now in our opinion. With RSI still showing downward pressure we now think the $2539 test could occur. With earnings season right around the corner, many analysts are expecting strong earnings reports. That could be the aspect that saves the S&P 500 on the downside, but regardless we will follow the current technicals and not be sold on upward momentum until it can power its way through the $2670 levels it continues to test.
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