Now Tough Work For The Stock Market Begins – Key Resistance Ahead

By | November 29, 2018

On Monday we posted an article entitled “This Is Where The Real Resistance Is On The S&P 500 Chart.”

In a matter of days the S&P has pierced through lower levels of lesser resistance and moved up to test an area we outlined in the article as key resistance. The top end of this zone is defined by the flat 200 day moving average currently at 2762.

The market was oversold and this recent bounce has picked up momentum. A break above the 200 day moving average before the week is out is certainly a possibility. But directly above the horizontal 200 day average is the declining 50 day moving average. If it is taken out then its a smooth run up to the 2820 level.

In both October and earlier this month eveningstar patterns have formed just below the 2820 level. An eveningstar is a bearish three-day reversal formation, often seen at market tops. It consists of a large up-day, a narrow opening and closing doji-day, and is completed by a large down-day. It represents a transition from bullishness to bearishness.

So, we have a market that was oversold and has bounced hard, picking up both positive price and money flow momentum, but approaching multiple levels of technical resistance.

Trending markets are relatively easy to trade. Choppy volatile markets are not.

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