Earlier this week, the market story said it was declining because trade negotiations in the US and China were found to have stalled. Yesterday's decline was attributed to the release of the Commerce Department, indicating that the US trade deficit in 2018 had reached a peak of 10 years.
That pushed the benchmark index to the lowest level since Valentine's Day. The fundamental drivers of the market may not be clear, but technicals are noticing that the uptrend is weakening.
S & P 500 Daily
The price of the SPX has climbed below the third upward trend since the pre-crack route. Typically, if three trend lines are violated, the uptrend may end.
Uptrend lines are generally drawn after a new peak. Once that uptrend line has been violated, a new upward line is drawn when a new, higher peak is recorded. That's why the 2.816.88-intraday in the month was high, higher than the peak of 2813.49 formed on February 25, a new third uptrend line, even though it has only been touched once since the bottom.
After the SPX fell below the third uptrend line, signed on Monday, he found support based on the trend line drawn by the lows of price congestion since February 21. The trend line is supported by the 200 DMA which is 0.6% below it.
Nearly 2,770.00 would show that supply had overwhelmed supply demand dynamics at the current level. A reversal would, however, be more likely after closing below 200 DMA, whose support resistance was in sync with that of the 5 February peak.
Both MACD and RSI fell after reaching overbought levels, contributing to the bearish outlook. Keep in mind, however, that while the uptrend is weaker, it is still pointing higher, until the price forms a falling peak trough formation.
Trading Strategies – Short position setting
Conservative traders will wait for a trend reversal before they commit to a short position.
Moderate traders run the risk of short access after the price has fallen below 200 DMA.
Aggressive traders can enter a short position with a slot below the trend line, drawing the low points of the congestion.
Trade sample
Mention: 2.765
Stop loss: 2770
Risk: 5 points
Target: 2,740, above the peak in February
Reward: 25 points
Risk-Reward Ratio: 1: 5
