S&P500 Index broke down previous horizontal resistance-turned-support

Published On: 13 September 2021, 12:00 PM | Jeraldine Tan, Senior Dealer    
  • S&P500 Index is in an upward trend the past two months and most recently broke down past a horizontal resistance-turned-support and is retracing back to the bottom trendline. Traders will observe the price action near this level.
  • Bulls may place limit orders at the trendline area which could result in a reversal. Other bulls will be patient and wait for a double bottom or lower high to form before putting on a position with stop loss below the trendline and profit target as previous high.
  • However if price does not show strong support on the first touch of the trendline, it signals that bears are strong – bulls should be patient to observe who is in control. If price breaks down below the trendline, bears can consider shorting on the break, or short on a follow through after the break, or for patient bears, to short on a pullback for better risk reward with stop loss at a recent lower high and profit target at the previous major low or even the start of this channel pattern.
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