SPX downside reversal with huge potential
SPX rejection from the long-term channel 3600 and break below 3389 downside horizontal resistance break are opening the downside reversal. A medium-term uptrend line has been broken to the downside and is on a retest. This breakout could lead to a test of the deeper correction reversal 2900 level test. A break and a follow-through below 3250 are required for the continuation lower to 2900.
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On a daily chart, we can see the reversal in a downside channel which could lead to a 3257 test again. Look for the short trade entries with the stop loss above 3400. Our trading system is indicating a potential of 200-400 points of profit. The short trade entries invalidation to come only on a clear daily close above 3450 and would trigger stops and a reversal of trade from short to long trade entry.
We have used the combination of the top-down trading analysis to get these key levels explained in the charts.
