S&P 500 May Be Showing Signs of Fatigue
It’s been a year since the market bottomed. Now the S&P 500 may be showing signs of fatigue.
First consider the channel we’ve been watching. Price came down and tested support in a big way in late February and early March. The bulls defended that pullback valiantly, but failed to reach the top of the channel on the bounce. When you combine that with the break of support three weeks ago, the entire channel could be fading.
Second is the bearish divergence. MACD has trended lower even as price made a new high on March 17. This should always be taken with a grain of salt because bearish divergence can give a lot of false signals. However, combined with other patterns it can help confirm a trend reversal.
Next is a price area between 3939.6 and 3950.4. That’s the candle wick between the open and the high on February 16, an earlier peak on the index. Notice how price has remained trapped below that zone every day since the Fed meeting. Has it become resistance?
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First consider the channel we’ve been watching. Price came down and tested support in a big way in late February and early March. The bulls defended that pullback valiantly, but failed to reach the top of the channel on the bounce. When you combine that with the break of support three weeks ago, the entire channel could be fading.
Second is the bearish divergence. MACD has trended lower even as price made a new high on March 17. This should always be taken with a grain of salt because bearish divergence can give a lot of false signals. However, combined with other patterns it can help confirm a trend reversal.
Next is a price area between 3939.6 and 3950.4. That’s the candle wick between the open and the high on February 16, an earlier peak on the index. Notice how price has remained trapped below that zone every day since the Fed meeting. Has it become resistance?
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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