S&P 500. Four Bearish Weeks in a Row and Price on a Major, Long-Term Support

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S&P 500 Technical Analysis

The chart you see in this analysis is a weekly chart of the SP500. Currently, the price is creating its fourth bearish candle in a row, which means that we’re very close to having 4 consecutive bearish weeks. We’re getting close and waiting for the close of a weekly candle on Friday. The last time it happened was in September 2020 and after that, the price bounced and went higher. So, what can we expect now?

The long-term situation doesn’t look particularly optimistic here. The SP500 created a massive head and shoulders pattern (blue). The most recent drop was put the finishing touches on the right shoulder.

What’s left is to break the neckline (green) and that can actually be a challenge. The struggle may come from the fact that apart from the neckline, it’s also a 23,6% Fibonacci and also a genuine support in general, which first showed how effective it was in the middle of 2021 (orange).

Trading Strategy

The SP500 breaking that support and closing a weekly candle below the green line will be a massive, long-term sell signal. As long as the price stays above that point there’s still hope. Selling while the price is still above the major supports is not the best idea, it’s generally believed that one should wait for the breakout first.

As long as we stay above, buyers can look for an occasion to bounce, however for that to happen we need to see some upward momentum, which is currently absent. What’s left is to wait. The shape and color of this week’s candle should be a great help and give us a hint about future movements.

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