November 24, 2022
  • November 24, 2022

S&P 500 bulls are finally in action

By on October 27, 2022 0

The S&P 500 over the D1 period was in a long downtrend that started in late August. A final lower bottom formed on October 13 at 3492.4.

A closer look at the Momentum Oscillator reveals a positive divergence between points “a” and “b” when comparing the lows at 3581.7 and 3492.4. This could have alerted technical traders to a possible reversal in momentum.

After the low at 3492.4, the bulls showed they were hungry for action after the long descending streak. The price broke through the 15 simple moving average with the next continuation of the Momentum Oscillator crossing the 100 base line in bullish territory.

A possible critical resistance level formed on October 18th at 3768.1 as the bears immediately attempted to regain control of the market. On October 21, the price failed to decline when it found support at 3633.4 and a higher floor was confirmed.

On October 24, the S&P 500 crossed the 34 mark. Simple moving average as well as the critical level of resistance to 3768.1 and three possible price targets could have been considered from there. By attaching the Fibonacci tool to the top at 3768.1 and dragging it down from the support level at 3633.4, the following targets may have been calculated. The first target was estimated at 3851.3 (161.8%) and this was achieved on October 25. The second price target could probably be at 3986.0 (261.8%) and the third and final target can be anticipated at 4204.0 (423.6%).

If the support level at 3633.4 is broken, the above scenario is canceled and precautions should be taken to manage any open risk.

As long as the bulls continue to control the market and demand exceeds supply, the outlook for the S&P 500 on the daily time frame will remain bullish.