S&P Top Of Expanding Flag

Published On: 22 August 2022, 10:00 AM | Jeraldine Tan, Senior Dealer

  • Equities had been on a down trend until recently probably after a few good data points such as Non-farm payroll where US added more jobs than expected. However the general macros are still not doing well and recession is still around the corner.

  • Recently the market exhibited a flag pattern down to the bottom of the upward trend channel since Covid – a large correction in itself – similar move in absolute terms as the sell off during Covid.

  • Since hitting the bottom where we expect depth of bids given most will not expect market to fall more than the last time, the past few weeks have been strong bull (weekly) bars up to the top of the flag where it was rejected.

  • Traders with a bearish fundamental view can short as price trades below the low of this last rejection candle from the top of the flag pattern. Conservative bears may want to wait for double top which may not come.

  • Bulls will buy into a break of the flag pattern with a view that market is actually improving. Conservative bulls may want to wait for market to correct and form a higher low before buying into the break of most recent high.


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