Technical Analysis: Pullback or Reversal?
- In the recent few weeks, we witnessed the S&P 500 pulling back to the lower trend channel line, and has consolidated. It seems as though the market has started to consider the impacts of the second wave of COVID-19 which has reignited in many cities.
- A bull would call this down move a retracement back to an attractive level, while a bear would call the start of a down move after a false break to the upside. Hence the range bound price action over the past week.
- Given the prior momentum, it still looks more probable for a move back up to test the new high at which point we will see if the bears have enough conviction to form a strong enough resistance to keep prices from going higher. Can the bulls keep the momentum going, or will they be left high and dry?
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