S&P Head and Shoulders by January - Knees and Toes by February?
The S&P 500 has recently formed a solid left shoulder and is now halfway through developing the head of a potential Head and Shoulders reversal pattern and divergence suggest we could form the right ear this week. This classic chart formation is often a sign of an upcoming trend reversal, typically from bullish to bearish. If the current pattern continues to unfold, the index could complete the right shoulder by January, signaling a shift in market sentiment. The key to confirming this reversal will be a break below the neckline, which is the support level formed between the left shoulder and head (aka the pearl necklace). Traders will be watching closely for any signs of weakness in the market as the price approaches this critical level. While the pattern isn't set in stone, the possibility of a bearish trend emerging by early next year is something investors should keep an eye on. If the pattern completes, the S&P could experience a significant pullback, so keep your eyes peeled because it could get bananas. A move above the current zone could cancel out this pattern from forming.
Chance of forming: <50%
Chance of forming: <50%
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