Possible Break Down Starting

I was hoping that SPX would go higher and test a possible resistance trendline in the 4300 area and that is still possible, but reviewing the charts over the weekend there is a strong possibility that SPX is about to break down.

So far the high is a near perfect backtest of the monthly middle band, which is not the most obvious resistance level, but is a very significant one nonetheless, as it is regularly tested fairly exactly as support in uptrends.

SPX monthly chart:

On the weekly chart the previous main resistance at the 50 week MA, now at 4021, has been broken and the break above confirmed. That is now an important support level and if we are going to see a hard break down that will need to be re-broken and converted to resistance.

SPX weekly chart:

The first serious support however is at the daily middle band, currently at 4053/4. That held on Friday and at the last test in January. The first sign of a serious break down would be a confirmed break below that.

SPX daily BBs chart:

The daily middle band is supported by the rising support trendline from the December lows, currently in the 4047/8 area. A break of both would look distinctly bearish.

SPX 15min chart:

Looking at the short term on ES the overnight high was just below the new weekly pivot at 4116.25, and the patter from the low on Friday morning looks like a rising wedge that may be a bear flag. A sustained break over weekly pivot would make this look a lot more bullish.

Adding a note just after the RTH open, ES has just perfectly tested resistance on this rising wedge, confirming the resistance trendline with a third touch. This wedge could still break up, but 70% of the time these break down of course.

ES Mar 15min chart:

There are some international numbers being reported today that should shed more light on global inflation levels. My suspicion looking at a lot of charts over the weekend is that either those will disappoint, or that the markets will respond negatively to them not disappointing.

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