There are a few interesting technical developments in the S&P 500 chart using the shorter term 15-minute timeframe that are worth watching as the stock markets continue to digest and discount news and data along the path of least resistance.
The chart of the S&P shows the break of the inverse head and shoulders which offers a potential target of around 1404. The right shoulder low was measured around 1306, which being higher than the left shoulder shows the bulls eagerness to buy that subsequently drove the price through the neckline resistance of 1335. 1330-1335 should be monitored for support; a potential back test could be tempting to the bulls who missed the initial break. A break of this support would signal that the rally was corrective in nature and that the daily downtrend should resume.
The consolidation pattern of the right shoulder also looks like a sideways congestion rectangle pattern, which is a continuation pattern of a trend. The support lows around 1306-1310 and the highs of 1325-1330 were each tested 3-4 times before the price accelerated through resistance of 1330. The measured target for this pattern suggests maybe a bit more upside to 1370 is possible before the move exhausts itself; although yesterday’s high hit 1363 which could be close enough.
I am also watching the new uptrend develop; we can draw a new support line from the 1266 lows, a break of this new trend, should it happen, would also be a concern for the bulls.
Just a quick note on the daily chart; the S&P has rallied back to perfectly test the topping pattern that broke down in May. There is potential for the downtrend to resume from here.
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