S&P testing key resistance after Wednesday’s drop

After reversing sharply on Wednesday amid concerns over the new Covid variant and Powell’s warning that the Fed may wrap up bond purchases sooner-than-expected, Wall Street has opened firmer.

But the recent trend has been bearish. It is therefore worth keeping a close eye on THIS resistance zone for a possible reversal yet again:

S&P 500
Source: TraidngCandles.com and TradingView.com

The above shaded region was previously support. Now broken, it is highly likely to turn into resistance, potentially leading to fresh falls.

If resistance holds, as I expect that it might, then the first bearish target would be the liquidity below Wednesday, where the bulls’ stops would be resting.

An extended downside target is at 4431, the base of the former bullish breakout.

While the the blue shaded region holds, the path of least resistance would be to the downide. If broken, this would end the short-term bearish bias.

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