SPX500, Approaching Essential Level Which Will Show Conclusion!

6 Haz 2020

Hello, Traders Investors And Community, welcome to this analysis about the recent price-action, the current formation-mechanism and the outcome which we can expect the next times within the major leading stock-index S%P 500. At the moment the world is in a massive fluctuational volatile environment with heavy protests ongoing in several countries in the world which weren't seen so far since the 68th in the past century, in fact it is the first time in the 21th century that so many protests happening in that a variety of different countries. The whole corona-crisis and the resulting restrictions covering lockdowns and more were the triggers for that caos but what we see in the markets is an exceptionally unexpected uptrend even though the real economy is still damaged of the crisis we see a growth which firstly is the product of central banks and their money policy pumping fresh money into the markets but can this go forever in a damaged real economy or is it just a whole bull-trap? Therefore we are looking at the leading index within its 4-hour timeframe.

As you can examine in my chart with the blue lines the index is trading in a steady uptrend which has its origins after the lows of the corona-breakdown. After these lows, we first broke above the 40 and 100-EMA which you can see marked in orange and black in the chart from there on the index established the uptrend-channel with its currently speed-support-line meaning the trend is faster than before. When considering the bearish overall scenario which was established in the corona-breakdowns the current movement can be completely neutral and included within the bearish market environment but when considering the bullish scenario and a possibility to the upside which is definitely given at the moment after we saw these high volatile moves now we can examine that when SPX 500 takes out its highs substantially there can come even more growths and prosperity which is possible but it will be a high speculative rally to the upside driven from freshly printed money as the real economy is still in trouble this can increase the tensions and can possibly elude into an even bigger crisis in the aftermath.

The next weeks and months will be decisive not only for the stock-markets but also for the real economy and the ongoing protesters in the world, this paradox situation can lead to a stabilization when the majority of countries can establish its prosperity, growth and the status quo which was seen before the crisis, in this context the real economy will turn the lights on to the upside which will jump over on the stock market and this could result in a healthy bullish environment when the real economy and stocks going in one direction, on the other side ongoing discrepancies between the stocks and real economy will lead to an unhealthy environment which will increase the bearish pressure to the downside. Technically speaking we need to hold the current range between the 3150 and 3370 level and confirm it as support for setting up to test the all-time-high, otherwise when this does not happen and we fall below that level and cross the lower boundary of the channel down it will be bearish and a possible double top pattern can confirm.

It will be highly interesting how the market reacts to the possible scenarios given at hand, for traders this means both scenarios can be traded after confirmation, a long-trade can be entered when we stabilize in the uptrend channel and a short-trade when we cross the uptrend-channel to the downside. But be aware when we cross the all-time-high immediately to the upside without confirmed support before, this can just be a whole bull-trap which can elude the price back again. Overall when we cross the all-time-high to the upside and continue with an uptrend this will be a highly speculative rally because the real economy isn't that ready at the moment and as already mentioned these discrepancies can lead to an unhealthy market-environment. We will see how this plays out and it is important that we are ready to take the proper action in the upcoming market situations when they arising.

In this manner, thanks for watching, support for more market insight, all the best and have a good rest of weekend!
There are many roads to prosperity in the modern economy, but one must be contemplated.

Information provided is only educational and should not be used to take action in the markets.

11 Eyl 2023

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ANALYSIS UPDATE: The S&P 500 pulled back in the range to confirm the major ascending trend lines as support from where it continued with a breakout.