S&P 500 –What Happens Next?

Published On: 8 March 2023, 5:30PM | Annabelle Tang, Dealer
Trade Set-up:
  • From the chart above, we see that S&P500 has begun a downwards trend starting from the start of this week.
  • Using the Ichimoku Cloud indicator, there are several things to note.
    1. With prices being below tankan-sen (green) and kijun-sen (red), this signifies an obvious bearish trend. We also note the two lines as resistance points to be reinforced later.
    2. As prices are below both senkou-span A & B (cloud) – commonly used/viewed as a leading indicator, this implies that prices are likely to continue the current bearish trend. Additionally, since the distance between prices and the cloud is quite wide, bearish view is further reinforced and strengthened.
    3. However, we must also take note of the thickness of the cloud. The thicker the cloud is, the greater the volatility, more consolidation and the stronger the resistance. With the cloud shown above being rather thin, this implies a high possibility of prices piercing through the cloud abruptly hence a stop loss must be placed for adequate risk management.
Trade Execution:
  • A highly volatile and uncertain market presents itself as greatly opportunistic. We note two flat Senkou-B lines, serving as one of the strongest resistance reinforcement the Ichimoku Cloud indicator can provide. The first line occurred at 4,070 and the second line at 4,021. Traders can prepare to short at any price higher than 4,000 with a possible take profit of 3,937.25 or lower and cut loss at 4,025.
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