S&P 500: Symmetric Triangle Confronts Bearish Engulfing Pattern
15 September 2023
In the last technical analysis of the week, we will focus on the S&P 500 index, given our interest in developments across various indices. The recent market sessions have been quite dynamic. Yesterday's session was notably bullish, but today's session has taken a sharp turn for the worse. This shift has raised concerns as yesterday's bullish momentum is almost entirely offset by today's bearish movement. This scenario potentially forms a bearish engulfing pattern, which could pose significant risks for buyers in the market.
Upon closer examination of the chart, we can identify a symmetric triangle pattern outlined by the red lines. The price has consistently bounced off the upper red line, indicating strong resistance. As we look ahead to the coming week, it appears likely that the price will target the lower red line, given the current bearish sentiment.
A noteworthy point to consider is the potential for a long-term buy signal. If the price manages to break above the upper line of the triangle, it could provide an excellent opportunity for buyers to enter the market, potentially signaling a bullish trend reversal.
On the flip side, a break below the lower line of the triangle could trigger a sell signal, and traders should be prepared for such a scenario. In this case, the long-term uptrend line, marked in blue on the chart, could serve as a potential target for the downward movement.