Wow, here we go again testing the crucial 1,129 to 1132 resistance zone for the third time in the previous 3 months! The question on traders minds is will resistance hold or does it break? What you want to do is plan for both possible situations so you are not caught off guard. The S&P 500 is at an essential level because this level has acted as resistance three times now defining it as a longer term pattern. This upper wall test of the sideways rectangle pattern would give clear advantage to the bullls if broke. Allow me to share the two possible cases: 1. Life Cycle Of Sideways Rectangle Proceeds… If the life cycle of the sideways rectangle pattern continues, then we will see the current uptrend come to a conclusion here and a turn back down in a sell-swing that may take the market entirely back to the 1,040 area in a similar fashion as the sell-swings in June and August. 2. The Sideways Rectangle Reaches An End… In the event the S&P 500 breaks above the critical 1,130 resistance zone, then you can definitely expect this market to surge, in a wicked short-squeeze, to the breakout price target of 1,170 or maybe as high as the second breakout target at 1,220. While it seems insane that the S&P 500 could move upward from here understand that all patterns have a life cycle this includes sideways rectangles. Trend channels in addition to sideways channels usually end after 3 or 4 tests of the channel wall over a two to four month period. This sideways trend channel has matured and meets those conditions. Nobody knows without a doubt what will happen but you need to prepare yourself to make money regardless of what happens. If we get a break above 1,130, you need to go long with a target of 1,170 or even 1,220. If we bounce down off 1,130 you want to go short with a target of 1,040.
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Geez here we go again testing the important 1,129 to 1132 resistance zone for the third time in the previous 90 days!
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