I posted the chart below on twitter last night to show that the channel support that I posted as a target on Monday morning was tested at the close. I was concerned by that test being on the low ticks of the day, and we’ll have to see whether that holds this morning. On my main scenario we see a strong bounce from that support into new highs, very possibly this week. If we were to see a hard break down then I’d be looking for a very possible gap under channel support at the open today and at the moment at least, that seems unlikely. SPX 5min chart:
So what if channel support breaks? Well that would be a significant break but bears would still have two strong support levels just below that would also need to be broken. The first of those is at the very important 50 hour MA. This is generally not broken until an uptrend is topped or topping and closed yesterday at 2090. Bulls need to hold that level on an hourly close basis, and any significant move below it would look bearish. SPX 60min chart:
The daily middle band closed yesterday at 2088 and that too is very strong support. Bears need a decent daily close below that to break that support and open up a possible move back to the daily lower band, currently at 2042. SPX daily chart:
I am concerned about a break down here as the 5 DMA stat I posted on 16th March was talking about the significant possibility that the 2039 low would need to be broken before we see a new all time high. That’s in my mind today as SPX tests support and I’d note that the 2039 low is now a possible double top support level targeting the 1960 area on a break below it. I’m watching support today with great interest.