SP500: End of Bounce or extension higher?

Published On: February 4th, 2023|Categories: Global Technical Analysis|Tags: , , , , , |By |

SP500: End of Bounce or extension higher?

The million dollar question is, has the SP500 bear market ended or not. Below we are going to see why it shouldn’t matter for traders and investors.

The SP500 SPX hit the supply / resistance zone at 4200 on Thursday and on Friday made a reaction lower to close at 4130’s. Despite investors still remain skeptic about the almost 20% rally since October 22nd, the SP500 still remains strong with no signs of exhaustion.

Having said that, on the daily chart a Bearish Gartley harmonic pattern has been formed which might be something to watch during next week if price continues to trade below the Pivot level at 4200. To validate the harmonic formation, price will need to retrace below the 4000 price point and any possible bounces to fail below there.

Otherwise, if price gets back above 4200, then the index will most likely continue the extension towards the next important level at 4550’s. If that is the case, then a Bearish Butterfly formation could be forming at that level but that is something we will analyze if and when the time comes.

The abstract of this technical analysis is, if you are long place or adjust your trailing stop losses so in case of reversal you have the opportunity book profits. If you are short place your stop loss at a specific level you believe correct to minimize your trade losses.

Remember, despite investors still believe the ongoing bounce still a correction within the bear market, things might be different and price can extend towards the all time highs while everyone still waiting for the next leg lower.

Trade safe.

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