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SPX - macro levels of support

The next important support level on a monthly chart is located around 2,620.

That level is:

– where the long term up trend line is; and

– 33.3% retracement of wave ( 3 ) up, and

– that level stopped several down swings in March, April, May, October, November 2018.

S&P 500 - Monthly Chart updated on 3-08-2020

If we look at a weekly chart below we can see a similar candlestick formation back in October 2018. A strong red bold candle followed b indecisive doji and then resolved with another drop. That bearish candlestick pattern is called “bearish sandwich”. Back then the second candle extended by 100% of the size of the first red candle projected from the top of the doji candle in the middle. The same projection returns 2,726 in the current case.

Do not try to buy the first drop at open. Even if you miss the first pullback you will be able to keep trading. If, in contrast, you buy and it keeps dropping by another 100 points you will later blame yourself for stupid emotional trade. Do not be in a rush. Let bears show how strong they are.

S&P 500 - Weekly Chart updated on 3-08-2020

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