USSPX500: Lower support line of bullish channel tested today as index poised to either rebound or fall
The daily candle chart below shows the medium term price history of the USSPX500 contract for difference (CFD) which is trading near 2091.3 and less than 30 minutes (as of publication) before the market close in New York this Thursday.
This CFD aims to track the S&P500 Index which after moving higher from the session opening today- has returned to a new session lows 2088.6 near current levels. Last time this index CFD was reviewed US Equity indexes were pushing towards new record highs which persisted into May for the SPX500 before it returned lower.
Today's low coincides on the lower support line of the medium term bullish channel (see blue lines on chart below) which have been a major part of the overeall trend theme in recent months.
Conditions are now ripe for that trend to change if support is lost on the lower line of the channel, whereas if support holds a bounce higher should follow. Either way volatility may pickup and present high risk/reward conditions for traders.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 2101.00 with a Limit to take profit @ 2119.00 and a stop-loss @ 2089.00 Risk/Reward Summary: Limit risk = 18.0 points profit / (-12.0) Stop-loss risk = Gain to Loss ratio = 1.50
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 2085.00 with a Limit to take profit @ 2052.00 nd a stop-loss @ 2103.00 Risk/Reward Summary: Limit risk = 33 points profit / (-18) Stop-loss risk = Gain to Loss Ratio = 1.83
Short term daily candle chart:
Short term daily candle chart (zoomed-out):