The S&P 500 made a new all-time high. And the traders who follow our newsletters have once again learned from a simple pattern, which we have looked at many times before. Now back to it and technical analysis, which supposedly does not work.
A few days ago the following was written in the newsletter. Quote:
“Today will be the important day. One, even a long red candle does not indicate anything. However, if today also ends in a decline, then we should probably expect the price to be at the SMA 50 (red line) again.”
From here on, everything went strictly according to the scenario (pattern) that has been implemented on this chart 5 times already. The second red candle led to an increase in panic, and the third led to the closing of traders’ positions on stops.
The price reached the SMA 50 level. It was expected that once again we would see 3 red candles followed by a move in the opposite direction to new highs.
However, this time the pattern scenario has also accelerated. It brings in too much easy money. Traders did not wait for the formation of 3 red candles in a row. And started buying back the S&P 500 intraday, exactly from the touch point with the moving average.
Additionally, the bears were taken out who continued to short inside the day on this rise. They hoped that the day would end with a red candle after all. And when it didn’t happen, in a panic, they closed their positions closer to the closing of the American trading session.
From here it is simple. The price went up and yesterday we saw a new historical high in the S&P 500 index.
What conclusions should we draw?
There is a very strong long-term trend in the market. And the longer it continues, the stronger it gets. The smart money only stands with the longs. And stupid money, located in weak hands, starts shorting this trend every time it corrects. And each time they lose money on a new rise.
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