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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