Breakdown Gaps Close As Bounce Continues
Declan Fallon | Sep 24, 2021 01:56AM ET
The tough start to the week has seen much of this lost ground recovered, but getting to challenge highs is still some way off.
The NASDAQ is at least approaching its 20-day MA as technicals see a small recovery with a new On-Balance-Volume 'buy' trigger. The index did successfully defend support connecting the July and August swing lows, although it did suffer a relative performance loss against the MACD.
The S&P had already seen a breakdown from its rising wedge, so today's gain was enough to see it get back above its 50-day MA, but it wasn't enough to challenge former support - now resistance. Technicals are net negative. This looks likely to fail on the test of wedge resistance but let price action determine what happens next.
The Russell 2000 made a second test and bounce from its 200-day MA as it also made a move through its 20-day and 50-day MAs. The index remains range bound with mixed technicals - not surprising given this action.Until there is challenge of range support or resistance there is little to be read into the ebb and flow of daily price.
Going forward in the short term, we have to see how much influence the pattern breakdown in the S&P proves to be. It's going to be a few days, if not weeks, before the Russell 2000 resolves which way it's going to break. Given the extent of the rally from Covid-19 lows, don't be surprised if the net effect of the breadowns is just to push markets sideways for a while. It's easy to get sucked into the doom-and-gloom of the internet, but price action doesn't warrant that.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.