S&P500 Holding Above Broadening Wedge, FibsThe S&P 500 Index(SPX) closed Friday at $3,768.26, down -56pts(-1.5%) on the week. Price marked its 8th weekly close above the upper line of the yellow broadening wedge pattern which for now indicates a successful breakout from the consolidation pattern. After hesitating just below the 127% Fibonacci extension(based on the 18Feb2020 high and the 23Mar2020 low Fibonacci Range) for most of December, price is now trading between the 127%-141% Fibonacci extension levels with the 141% extension being the next target/resistance level if the current wedge breakout sees upside continuation.
Last weeks’ price candle closed as an inside candle(bearish harami) which is where the entire trading range of the candle(upper wick to lower wick) was within the trading range of the candle prior to it. This is considered a bearish pattern when preceded by an overall uptrend in price, but there have been many recently that did not result in moves lower in price. For now price has positive momentum as indicated by the green price candles. In this momentum algorithm price candles are colored green when price has positive momentum, gray when price has neutral or no momentum, and purple when price has negative momentum.
The overall trend and momentum in the S&P 500 are considered to be bullish with a move up toward $3,900 likely as price looks for the next Fib extension to test. Stop-loss orders for trend traders should be placed just below the upper line of the broadening wedge pattern as a return back within that consolidation range would likely lead to more downside pressure on price.
