Wednesday, 25 August 2010

15:30 BST - SPX Update: 5 and 15 min charts: bullish divergences indicate conditions in place for a low

Here's the updated 5 min chart I posted earlier (see the earlier post here) which suggested we might see some bullish divergence between the indicators and price on a new low in price today:

SPX 5 min:

And here's the 15 min chart (I've left the comments as they were for the moment):

SPX 15 min:

The divergences show that the technical conditions for at least a short term bottom exist.

It doesn't, however mean that price can't keep falling - it will do if bearishness remains strong. The divergences are just warnings to stay alert for price action that might signal that a low of some sort is in. Its important to await such action because divergences can be eliminated if price continues to move down.