SPX: Could it reverse and fill the GAP at 4,652?
Hello traders and investors! Let’s see how the SPX is doing today.
First, in the 1h chart, it lost the support level we mentioned yesterday, triggering a bearish reaction, as expected. The correction was quite sharp, but is this a reason to panic?
To be honest, I was expecting a sharper correction, maybe to the previous support at the black line, but the index is trying to find support already. Yes, it still could retest the 21 ema and do a Dead Cat Bounce all the way down to 4,453. However, I'm not too convinced of that, and it is important to look at the Futures for more clues:
The index hit its previous support today at night, at the 4,456 (red line), and it is bouncing back up nicely. It found a resistance at the 50% Fibonacci’s Retracement, and it is trying to stabilize today.
As far as I know, the best moments to buy are near support levels, like red line, and sell near resistances, like the blue line. Given the way the SPX and the Futures are looking, it is plausible to see more upside potential, the question is, for how long it could go up.
Regardless of how the index reacts in the 1h chart, I still see the 38.2% retracement in the daily chart as the most important support level for the mid-term. By losing this retracement, it would trigger a Double Top chart pattern, and it could easily slip towards the 61.8% retracement.
If we’ll see a Dead Cat Bounce or not, we don’t know yet, as we lack confirmation on the charts. Any comment on that would be just a guess.
However, if the SPX breaks the resistance (previous support) at 4,531, this could be a nice false breakout, and the index might trigger a pivot point that could help it to break the resistance at 4,583 and fill the next gap at 4,652.
It’ll depend on how the index will close today. I’ll keep you guys updated, as always. If you want to keep in touch with my daily analysis on indices and stocks, remember to follow me, and to support this idea if it helped you.
Have a good weekend.
Nathan.
First, in the 1h chart, it lost the support level we mentioned yesterday, triggering a bearish reaction, as expected. The correction was quite sharp, but is this a reason to panic?
To be honest, I was expecting a sharper correction, maybe to the previous support at the black line, but the index is trying to find support already. Yes, it still could retest the 21 ema and do a Dead Cat Bounce all the way down to 4,453. However, I'm not too convinced of that, and it is important to look at the Futures for more clues:
The index hit its previous support today at night, at the 4,456 (red line), and it is bouncing back up nicely. It found a resistance at the 50% Fibonacci’s Retracement, and it is trying to stabilize today.
As far as I know, the best moments to buy are near support levels, like red line, and sell near resistances, like the blue line. Given the way the SPX and the Futures are looking, it is plausible to see more upside potential, the question is, for how long it could go up.
Regardless of how the index reacts in the 1h chart, I still see the 38.2% retracement in the daily chart as the most important support level for the mid-term. By losing this retracement, it would trigger a Double Top chart pattern, and it could easily slip towards the 61.8% retracement.
If we’ll see a Dead Cat Bounce or not, we don’t know yet, as we lack confirmation on the charts. Any comment on that would be just a guess.
However, if the SPX breaks the resistance (previous support) at 4,531, this could be a nice false breakout, and the index might trigger a pivot point that could help it to break the resistance at 4,583 and fill the next gap at 4,652.
It’ll depend on how the index will close today. I’ll keep you guys updated, as always. If you want to keep in touch with my daily analysis on indices and stocks, remember to follow me, and to support this idea if it helped you.
Have a good weekend.
Nathan.
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