Wednesday, 17 November 2010

14:41 GMT - SPX Update of the daily chart

The downside that the daily chart seemed to be suggesting at the end of last week (see my post at the weekend) has transpired. However, we're now at an area where there may be a bounce or at least a pause:

SPX Daily:

This is a close up of the daily chart posted at the weekend. You can see that we've reached the bottom of the area of support that I had highlighted and we're also in the vicinity of the lower line of the blue pitchfork and the 50ma.

These reference points would be a logical place for at least a pause in the decline. However, if things are really bearish, we could see price just slice through these areas just as it has sliced through and arrived at the bottom of all that congestion that should have been support.

Such a move wouldn't be too surprising since the indicators on the chart don't suggest that a significant bounce is likely as yet. Still, with these reference points so close by, its just as well to be prepared for a bounce from around the area of these reference points or at least some sideways consolidation before any further downside suggested by this chart can occur.