Are bulls ready for a comeback?

SPX is trading again around and below 2900. Price has pulled back more than 40 points after a strong move higher from 2855 to 2958. Price is now at the 61.8% Fibonacci retracement level of this move and we usually see reversals at this point. This does not mean that a reversal WILL happen but we say that it is highly likely. If this is the case then we focus on the bullish scenario of a higher high in price and we look next for a break of recent highs at 2958. This would trigger our next target at 3000 points and higher. Price now is below the Ichimoku cloud in the  4 hour chart and challenging the cloud in the Daily chart. So 2890 area is important from many aspects.

Breaking above 2958-50 area will also signal the break out above the 4 hour cloud. This would be a bullish sign. All this of course in the event we see a reversal from current levels.

Conclusion. I would try a small long position at current levels with stops at recent lows at 2955. I would add on a break above 2958. This is an area of increased probabilities of a reversal to the upside….thank you for taking the time to catch up on my thinking

 

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