We've been on a 11 year bull run. As seen on this chart, any sizable downturn in SPX has consistently bounced off of the 11 year uptrend line, most recently, back in Dec. 2018. As we see these downturns, you can notice that the range in RSI, as well as price, has become wider and deeper with each peak and troth, as the bull run and cycle becomes long in the tooth with each passing day.
The question to ask is, will the trendline support once again hold and head the markets higher? Will it go straight to it right now and slash through (or bounce), or will it find support before, move higher and sideways, then revisit the trendline at a later time?
If the patten continues, it would indicate that SPX will find some kind of support before the trendline, bounce higher toward 2950, move sideways until the next market moving event (US elections) and revisit, perhaps, and test the trendline support then.
If i consider that these moves are becoming more volatile and deeper in range, then there's a fair chance that the current downturn will not follow history and visit the trendline support without having a upside or sideways move. There are several uncertain factors before us, and these can have a accumulative, negative effect that will drive price down, slashing support areas like butter.
There are several factors here on how the markets will behave; the corona virus, the oil/energy war, and the US elections, and the effect these things will have an impact on the global economy. Not to mention that we've had a long bull cycle. But as a technical trader, these issues, while should not be ignored, is noise that can fog up what the technical indicators are showing and how the market is interpreting the data.
In conclusion, there's nothing written in stone that a downside move MUST immediately hit the next major support level. While that trendline support is tempting in making one assume where we are all headed, markets are hardly that predictable especially when facing unknowns that present itself before us - the three events that i mentioned previously. One needs to look at the technicals in the long term and short term for guidance, and as hard as it is to do, block out the noise and see what the market is telling you through the technical indicators.
The question to ask is, will the trendline support once again hold and head the markets higher? Will it go straight to it right now and slash through (or bounce), or will it find support before, move higher and sideways, then revisit the trendline at a later time?
If the patten continues, it would indicate that SPX will find some kind of support before the trendline, bounce higher toward 2950, move sideways until the next market moving event (US elections) and revisit, perhaps, and test the trendline support then.
If i consider that these moves are becoming more volatile and deeper in range, then there's a fair chance that the current downturn will not follow history and visit the trendline support without having a upside or sideways move. There are several uncertain factors before us, and these can have a accumulative, negative effect that will drive price down, slashing support areas like butter.
There are several factors here on how the markets will behave; the corona virus, the oil/energy war, and the US elections, and the effect these things will have an impact on the global economy. Not to mention that we've had a long bull cycle. But as a technical trader, these issues, while should not be ignored, is noise that can fog up what the technical indicators are showing and how the market is interpreting the data.
In conclusion, there's nothing written in stone that a downside move MUST immediately hit the next major support level. While that trendline support is tempting in making one assume where we are all headed, markets are hardly that predictable especially when facing unknowns that present itself before us - the three events that i mentioned previously. One needs to look at the technicals in the long term and short term for guidance, and as hard as it is to do, block out the noise and see what the market is telling you through the technical indicators.