This week we’ve seen both CAD/JPY and USD/JPY stall at resistance clusters so, with S&P 500 also stopping at a pivotal level, it suggests risk sentiment may have approached an inflection point.
We can see on the daily chart that the S&P 500 has rallied no less than 10% in just nine trading sessions since the 2346.58 low. Whilst bears may be rubbing their hands with glee, it’s worth noting that a large rebound within a decline is typically seen within a bear market meaning new lows cannot be ruled out. Indeed, the rally which lead to the spinning top Doji at 2800 paved the way for a 16% decline over 14 sessions throughout December. Moreover, the daily trend structure remains firmly bearish.
Taking a closer look at the candles, the two recent sessions have closed with a hanging man reversal and spinning top doji. That we’ve seen reversal candles beneath a resistance zone shows a hesitancy to push higher and brings the potential for a swing high to form.
Of course, near-term momentum remains firmly bullish, so we’d want to see evidence of price topping out or a firm rejection of 2600 before anticipating that a swing high is in place. But, if bearish momentum is to return, we can assume the bearish trend has resumed and gun for the 2443.96 and 2346.58 lows.