Is Last Weeks Bullish Rally about to Fizzle Out?

Tom Gentile

Posted in
Technical Analysis

By: Tom Gentile
June 28th, 2022

2 mins read

Based on today’s market action in the equities market, it seems the bullish rally off last weeks lows has at least stalled for now.

Tomorrow is another day and things could very well regain bullish momentum and continue on, but today was a bearish reversal day and it closed near its lows which is a bearish sign things may decline further.

Old Support Becomes New Resistance

This pattern has been referenced in prior articles as it and its opposite (Old Resistance becomes New Support) are two common and for us reliable and popular patterns. It seems a disservice if these patterns are not pointed out and emphasized when they appear.

390 on SPY was a support area since June. It tested it successfully twice and the third time it hit there it broke down further below that price.

SPY bounced up to that yesterday and the trade day before that. But today gave up the ghost as the saying goes and reversed course.

Image 65
Figure 1: SPY Potential Old Support Becomes New Resistance

Target Shooting

When it comes to target shooting what we are looking for is either a price target for profit or a support or resistance level one can consider initiating a trade or investment.

I have to horizontal, dotted lines placed in the chart (figure 1).

The upper dotted line is a potential target price should SPY take out the pivot high.

The lower dotted line is the potential target price to the downside should SPY continue to sell off.

In either case, whether you and your broker decide to trade it higher or lower, that 390 price could be used as a consideration for a technical stop in either case.

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