S&P Successfully Tests Channel Support

By | January 4, 2016

On Friday I noted that, “I have been highlighting for some time the stochastic oscillator on the daily timeframe and its accuracy in identifying short term shifts in price momentum. Crossovers in overbought or oversold zones and then moves out of those zones have signaled short term reversals. The oscillator has made another bearish crossover and is moving out of an overbought condition. The assumption is that the index will retest the channel low.” I had no idea that it would test channel support the following trading day.
Fortunately, the index was able to bounce off that level and trade up closer to mid-range into the close. The price action formed a hammer-like candle, but I do not expect the upper end of the declining channel to be retested tomorrow.

99609.SPXchart

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