Monday, February 10, 2020

Bearish Divergence On SP500

Marco Tosoni

FХ Strategist & Financial Commentator

After a strong recovery in the first part of the last week, the American index marked a new historical record on 3360 area on thursday, followed by a correction on Friday and a weekly close around 3320.

The volatility is progressively rising during the last 3 months with temporary increase of the daily range especially since January, because of the tensions in the Middle East and the cloudy news about the coronavirus that are shaking the financial markets time by time, suggesting the chance of a stronger bearish correction in the next weeks.

Looking at the RSI, we can detect a clear bearish divergence, which could start a significant bearish movement in case, during the next 2 or 3 trading sessions, the SP500 will come back to the 3220 area.

The bearish divergence would be activate today, in case of a close below Friday’s bottom, around 3320.

However, there is still one element in favour of a continuation of the uptrend: the historical top in fact was set during the pre-opening session on last Thursday, or before the opening of wall street. From the statistical point of view, I want you to know that, for about the 90% of cases, a definitive historical top, is set during the opening hours of wall street, while the top marked on the futures during the pre-opening session, tend to be broke up within the next 5 trading sessions.

As always I recommend to trade carefully and to plan at best every move. Have a good trading and see you for the next video.

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