The market has reached a junction where a big move in either direction will soon be clarified. Prices have fallen hard the last few days moving below the low of 12th of October cancelling several bullish scenarios and reviving the bearish ones. Our last call was at 1460 for a top as the index had reached the upper pitchfork resistance. After breaking the middle pitchfork support, the possibilities of a wave 2 have been diminished.
Looking at the daily chart above, my first reaction is that the market is seen to move sideways between 1420-1470 with no clear impulsive formation. The index still trades inside the upward sloping trend channel from 1260 area and has just touched the lower channel boundaries yesterday. Another bullish sign is the daily candlestick that was made yesterday. We feel confident that the market will rise and resume the upward trend towards the end of the year. However price action is our guide and prices need to overcome 1440-45 and 1470 resistances in order for the bull trend to resume.
Taking a closer look using the 60 minute chart of S&P we observe how prices were rejected at the upper pitchfork resistance at 1464. Yesterday the market bounced as prices touched the lower pitchfork support. Resistance lies at the middle pitchfork. Bulls need to move prices above that level and break in the process the 1440-45 level upwards. Bears on the other hand want this decline to continue with a move below 1415. Even if the market bounces upwards from this level, bears will still have a chance to take lead again at 1440-45.
Concluding we concetrate on two price levels. 1440-45 is the first price level that bulls need to break for the continuation of the uptrend. The second important price level is 1420-10. Bears want a close below this level for downtrend to accelerate with targets towards 1300-50.
Thank you for taking the time to read my post.
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