S&P 500 Looks To Test Resistance

It is fascinating that we are so close to the all-time highs on indices giving us a sense of such a huge uncertainty on the market. With almost every tick down, sellers are celebrating the new bear market. Most of that is generally just wishing not trading and is mainly betting on possibility than probability, but we all know that it’s the probability that wins in trading.

With that being said, let’s talk a look at the , trying to be as objective as we can, taking into consideration only the chart and the story behind it. The first thing you see is the rise from the end of the year, which ended with establishing the new all-time highs.

Many will call it a Santa Rally, and they will not be mistaken. We can see that it broke the crucial horizontal resistance around 4740 (orange). Just for a while, though, which actually can be worrying as it makes a false bullish breakout (yellow). False breakout usually tends to give strong signals in the opposite direction, so in our case, to the downside.

There is a significant resistance (orange), but there is also support. The crucial one is the dynamic up trendline (black), connecting the most recent higher lows. It helped the buyers a few times and can help them again.

We are currently locked between the horizontal resistance from the top and the dynamic resistance from the bottom. There is no clear trading signal as long as we stay between them. The breakout of the 4740 resistance will give us another mid-term buy signal, and the breakout of the up trendline will provide us with a signal to sell. As for now, the best option seems to wait patiently.

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