This type of action is what I call a "Technical Reset," meaning, news came out and everyone reacted in panic mode on Friday, but when market participants realized it was just a fearful/impulsive act, they started buying again knowing it was nothing but negative hype; thus the price-action is getting a "reset" going back up to its proper level pre-panic (this is why technical analysis is so valuable).
I tweeted on Monday (after the market close) why we should keep calm and understand the big picture.
Notice, I did not say that we will see a bounce next day because I did not know that. But I wanted you to understand that despite the recent panic move, the intermediate-term uptrend was still valid knowing that we are still trading above the Fib. Retracement Zone (highlighted area as you can see in the charts below).
The market bounced hard yesterday, right on that first level of Fib (red circle) at 38.2%, and today, we saw a strong follow-up bounce in SPDR S&P 500 (NYSE:SPY), demolishing short-term bears/sellers.
Even though minor-term sentiment had abruptly changed to "bearish" after the #BREXIT news hit on Friday, but we couldn't ignore the intermediate-term strength just yet.
Even with the strong bounce of the last few days, buyers are not out of the woods yet, as I would say that the minor-term sentiment is still neutral-to-bearish as of today, because of the declining 10/20EMAs (exponential moving averages).
If we are able to get back well-above $210, I think, then, the minor-term sentiment will shift back to bullish and the moving averages will curl back up.
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