Tackle Today: S&P 500 Double Bottom
May 27, 2022
«Bulls Fight Back.»
Traders,
The S&P 500 is on the verge of completing and confirming a classic double-bottom formation. Also known as a “W,” this reversal pattern forms at the end of a downtrend and reveals buyers have finally rescued prices from sellers. Let’s review a few key points about the setup.
① First, downtrends are comprised of lower pivot highs and lower pivot lows.
② Second, when bulls succeed at defending an old support zone, an equal pivot low forms. This shifts the pivot relationship and suggests the balance of power is changing.
③ Third, after forming an equal pivot low, prices rally back to the old high to create an equal pivot high. This ends the streak of lower pivot highs and suggests more neutrality in the trend.
④ Fourth, prices must break above the old resistance zone to confirm and complete the pattern. This officially forms a higher pivot high.
The S&P 500 enters Friday’s session testing its old high near $4,100. Let’s see if the bulls succeed in their breakout bid.
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Chart of the Day: S&P 500 Double Bottom (/ES)
The W is nearly complete. Don’t fail us now bulls!
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