US500 - Are Bulls Setting Up for a Bullish Push?Overview of Market Structure
The US500 has been trading in a well-defined bearish channel for an extended period, continuously making lower highs and lower lows. This downtrend was respected until recently, when the price broke out of its bearish structure, signaling a potential shift in market sentiment.
Following the breakout, price also breached a key resistance level (marked in red), which had previously acted as a significant supply zone. Now that this resistance has been broken, it may flip into a support level, offering a high-probability area for a bullish continuation.
I expect price to retest this newly-formed support zone before continuing its move upward, targeting the unfilled imbalance zone above (highlighted in green).
Breakout of the Bearish Structure
One of the most important aspects of this setup is the confirmed breakout of the bearish structure. The market was respecting a descending channel, creating lower highs and lower lows. However, with this breakout, price is no longer following the previous downtrend pattern.
A breakout like this often leads to a shift in market direction, meaning buyers are now in control, and the next likely move is bullish continuation.
Resistance Break & Potential Support Retest
The red zone represents a major resistance level that has now been broken. This area had previously rejected price multiple times, showing that sellers were strongly defending it.
Now that price has successfully closed above this level, we can anticipate a retest of this area as new support before price resumes its move higher. This is a classic example of a resistance-turned-support flip, a key concept in technical analysis.
Imbalance Zones & Price Efficiency
An important part of this trade setup is the unfilled imbalance zone above. When price moves too quickly in one direction, it often creates gaps or inefficiencies in the market, which tend to get revisited later.
The unfilled imbalance zone above (highlighted in green) is a key target for this bullish move.
Price is likely to fill this inefficiency after confirming support at the previous resistance level.
Since price action tends to seek out liquidity and inefficiencies, this gives us a clear roadmap for the next likely movement in the market.
Why This Trade Has High Probability
Breakout of Bearish Structure – This suggests a potential shift from a downtrend to an uptrend.
Resistance Turned Support – A classic market structure retest that provides strong confluence for a bullish move.
Imbalance Fill – The market tends to fill inefficiencies left in impulsive moves, making the imbalance zone above a logical target.
Liquidity Grab Potential – Retesting the broken resistance could serve as a liquidity grab before price moves higher.
Conclusion
This setup provides a high-probability long opportunity based on a bearish structure breakout, resistance-turned-support retest, and imbalance fill target. If price follows the expected path, we should see a retest of the red zone before a bullish continuation into the imbalance zone above.
By patiently waiting for price confirmation at key levels, this trade offers a strong risk-to-reward ratio while aligning with smart money concepts and price efficiency principles.
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