Closer look at the current S&P500 situation
Updated
This analysis shows what I am currently looking for in the market, regarding the S&P500 possible outcomes.
Since my last post the bulls made a good job and prices reached the previous tops level, at a very strong resistance near 4200.
But at such levels a small range is common and expected. I highlighted the zone between the orange lines, that was defined by the last top and the last bottom. I am carefully observing the movements around this small area, and I consider that the outcomes from it may lead to decisive movements. I am considering the breakout of the 4200 to be a long trade trigger, whilst the breakdown would be a short trade trigger. But while none of these cases happen I remain neutral until I can see some outcome out of this relevant resistance level.
The overcoming of the 4200 zone would be the final missing confirmation of a trend reversal (from bear to bull).
On the other hand, this resistance can do its job once again and hold the prices below it, keeping us in the congestion or in the bearish scenario for the next few months.
It is good to note that we're close to the "sell in May" seasonality.
Since my last post the bulls made a good job and prices reached the previous tops level, at a very strong resistance near 4200.
But at such levels a small range is common and expected. I highlighted the zone between the orange lines, that was defined by the last top and the last bottom. I am carefully observing the movements around this small area, and I consider that the outcomes from it may lead to decisive movements. I am considering the breakout of the 4200 to be a long trade trigger, whilst the breakdown would be a short trade trigger. But while none of these cases happen I remain neutral until I can see some outcome out of this relevant resistance level.
The overcoming of the 4200 zone would be the final missing confirmation of a trend reversal (from bear to bull).
On the other hand, this resistance can do its job once again and hold the prices below it, keeping us in the congestion or in the bearish scenario for the next few months.
It is good to note that we're close to the "sell in May" seasonality.
Note
I liked a lot the candles of the last two days (April, 25 and 26), they were large, almost no wicks and came with above average volume.That's everything I wait from a good breakout candle. Nonetheless I was out of office these days, and I didn't open a trade so far.
Fortunately, the market is making a pullback and I'll probably do something by the end of the day.
I also must say that I was not waiting for some good price movement in such a short period, but I'm glad it happened. God knows how I was missing these above average volume days!
Note
It turned out that I didn't open a trade yesterday at the market's closing, because the bulls held the prices so high that frustrated my bearish intentions. In fact, what a candle we had, ladies and gentlemen! A large volume, with a large range, closing very near the high, almost no wick.This screams bullish, and I would gladly trade it using a short term call. I’ll see how the market opens on Monday and check my toolbox to see if I can seize this movement somehow.
At the end of the day, the 4200 are not letting us down! Let bulls and bears fight, because, finally, some action showed up. A little observation is that this kind of directional days that are happening are very good for day trading, and next week is the first of the month, which comes with a lot of economic data moving the markets. So, day trade is an acceptable tool to approach these days.
Note
Update for this chart. We remain inside the congestion. We had powerful bars up and down, and also reversion candles near the S/R lines.At May, 5th we had a bullish bar after a hammer, but this week candles are failing to continue that movement so far.
It is good to notice that we already have a triple top at 4170.00 (very very bearish).
4070.00 remains as a short trade trigger level.
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