Multiple reversal patterns
Reversal patterns appeared after a period in which SP500 tried to break the resistance from 2660 – 2680, now, the price is again at the point to break thru this important resistance. Since 22nd of March until now, the price created two inverted SHS (Head and Shoulders) patterns and a huge double bottom pattern (which is a variation of AB=CD pattern), but none of them couldn’t break to the resistance zone.
Both head and shoulders and double bottom pattern are part of price action patterns and those are some of the powerful patterns from the price action principles. Usually those patterns appear at support and resistance zones and both are reversal patterns which give to the trader an early clue that the price started to reverse.
At this point, the price created an ascending triangle on H4 (4 hours timeframe) and there are good chances for the price to break thru the resistance zone in the next week (16 – 20 of April). If there will be a strong momentum into the upside, the price might go to the next resistance level at 2740.
Keep in mind that the price could also drop again from this resistance point, this is why we need to wait for a confirmation before we open a trade.
Remember that since the 29th of January the SP500 had started a corrective move which is the biggest one in the last 2 years. The price reached the 2530 – 2530 support zone and retested it two times before the retest of the actual resistance zone.
Let’s take a closer look at the chart and see what will happen.