Originally published by guppytraders.com
The S & P daily chart is bearish with a longer-term downward target near 2630. There are four technical confirmation functions that speak much louder and more convincingly that presidents make statements that they win the trade war. The S & P is more sensitive to the collateral damage of these multiple wars with allies, friends and potential enemies.
The first bearish function is the double-top set around 2940. The market has tested this resistance level and has reacted strongly to it. Tested for the first time in August 2018, it was retested in May 2019. The withdrawal of this resistance level is significant.
S & P500 Daily
The second bearish feature is the break in the uptrend line that developed early May when the index responded to resistance. The trend line has its starting point in December 2018 and has determined the rising trend of the past 6 months. This decisive break in the uptrend line is bearish.
The third bearish function is the displacement below the historical support level near 2800. This first acted as a resistance level in March 2018 and has been tested several times as a support and resistance function. The rapid decline under this graph is bearish.
The fourth characteristic is the development of a head and shoulder pattern on the daily chart. We prefer the use of head and shoulder patterns on weekly maps, but they also appear in daily graphs. They are valid patterns if they are separated by several weeks of price activity. This head and shoulder pattern covers three months, so we treat this as a valid pattern.
The head and shoulder patterns provide a downward direction close to 2630. This suggests a minimum and maximum target for the current retreat. It doesn't matter which goal you choose, the outcome remains bearish.
Disclaimer: Daryl Guppy is a leading expert in the field of international financial technical analysis and special advisor for Axicorp. Guppy regularly appears on CNBC Asia and is known as "The Chart Man". Disclaimer: Daryl Guppy is not a financial advisor. These comments are for educational purposes only and provide an example of applied technical analysis.
