The following is another update to the current 'Chart In Focus.'
S&P-500 hourly chart featuring rising channel and gaps
You'll notice that the index had hit the upper end of a rising channel on Tuesday, before consolidating over the next two days and then falling to test the lower end of the channel on Friday. Despite having moved marginally below the lower channel line early on Friday, prices were able to claw their way back above the line and close just above it.
Traders will want to keep a close eye on price action early in the new week. A break of the lower trendline could mark a sell signal on at least the level of the intraday charts. Moreover, you'll notice that the index was able to find support on Friday when hourly RSI hit its centerline. Any breaking of the centerline in the new week would also be seen as a short-term sell signal.
When you take those two signals, together with the negative divergence that formed on MACD in the middle of the week that has just passed, you have a good collection of signals that favour the bears, at least over the short-term.
Assuming that sell signals actually get confirmed, we're likely to see a drop of a few percentage points. As you know, we've been making a big deal about the gaps that have been left on the charts over the past couple of weeks (aside from the ones left previously); perhaps a filling of the last three gaps could be in-the-offing, if the bears can take the opportunity.
« Rising Channel on S&P-500 Hourly Chart (3) »
The following is another update to the current 'Chart In Focus.'
You'll notice that the index had hit the upper end of a rising channel on Tuesday, before consolidating over the next two days and then falling to test the lower end of the channel on Friday. Despite having moved marginally below the lower channel line early on Friday, prices were able to claw their way back above the line and close just above it.
Traders will want to keep a close eye on price action early in the new week. A break of the lower trendline could mark a sell signal on at least the level of the intraday charts. Moreover, you'll notice that the index was able to find support on Friday when hourly RSI hit its centerline. Any breaking of the centerline in the new week would also be seen as a short-term sell signal.
When you take those two signals, together with the negative divergence that formed on MACD in the middle of the week that has just passed, you have a good collection of signals that favour the bears, at least over the short-term.
Assuming that sell signals actually get confirmed, we're likely to see a drop of a few percentage points. As you know, we've been making a big deal about the gaps that have been left on the charts over the past couple of weeks (aside from the ones left previously); perhaps a filling of the last three gaps could be in-the-offing, if the bears can take the opportunity.