25 Sep 2021, 20:52
The S&P 500 finally had a breakdown this week. It broke down below the black support line in the charts. This support has been holding steadily since April this year as the index continuously moved between this line and the blue resistance, forming a bearish ascending wedge pattern. As we anticipated in our previously weekly update, the index would most likely break below this bearish pattern formation. If investors are searching for a reason for this breakdown, then we would attribute it to the Federal Reserve announcement of tapering its bond buying program during the middle of the week.
However, most bullish investors would go further to argue that this breakdown is temporary. Indeed, after the breakdown on Monday, the S&P 500 index started rising again throughout the week, bouncing off at 4,300 support. Will the Index continue to move up this week? Let us not be quick to jump to conclusion. This is because we are now seeing the index been resisted by the black line again. Previously, this black line acted as a support and the index kept on bouncing above it. However, now that the index had broken below it, it could act as a resistance this week and push the index down. If this happens, then most likely, the bears are going to take control in the interim.
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