SPX Hanging Man
A hanging man is a type of bearish reversal pattern, made up of just one candle, found in an uptrend of price charts of financial assets. It has a long lower wick and a short body at the top of the candlestick with little or no upper wick. In order for a candle to be a valid hanging man most traders say the lower wick must be two times greater than the size of the body portion of the candle, and the body of the candle must be at the upper end of the trading range.
Along with a hanging man, SPX has a bearish divergence between price and the PPO indicator(orange arrows) with price making new highs while the PPO moves lower.
SPX failed to move lower last week as expected on coronavirus fears, was looking for a -5% decline and only saw -2% before price ripped higher. I still feel that the full effects of the coronavirus have yet to be priced in to markets, and that traders are underestimating the chain reaction that can occur globally with the production slowdown in China. If traders are expecting the Federal Reserve to save the day with lower rates and more liquidity injections I think they'll have to give the Fed a reason to do so i.e. start panicking and send equities lower.
I'm still expecting a decent pullback of -5% or more so the short-term view remains bearish, especially now that this novel coronavirus has upped its game and passed SARS in deaths. Coronavirus just did in 29 days what it took SARS 9 months to do.
Along with a hanging man, SPX has a bearish divergence between price and the PPO indicator(orange arrows) with price making new highs while the PPO moves lower.
SPX failed to move lower last week as expected on coronavirus fears, was looking for a -5% decline and only saw -2% before price ripped higher. I still feel that the full effects of the coronavirus have yet to be priced in to markets, and that traders are underestimating the chain reaction that can occur globally with the production slowdown in China. If traders are expecting the Federal Reserve to save the day with lower rates and more liquidity injections I think they'll have to give the Fed a reason to do so i.e. start panicking and send equities lower.
I'm still expecting a decent pullback of -5% or more so the short-term view remains bearish, especially now that this novel coronavirus has upped its game and passed SARS in deaths. Coronavirus just did in 29 days what it took SARS 9 months to do.
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