Is it the time to buy the risk?

In this article, we will give you an overview of the stock markets and we will try to give an answer is it the time to buy stocks and stock Indices.

There is a certain market rectangle formed and visible on the monthly chart of the S&P500 Index. The key point now is the 2600 level. This level is important for the downside continuation into the 34 WMA 2437 level or a bounce to 3000 level. This level will determine the possibility of the downside continuation or an immediate or delayed uptrend continuation. Why do we say delayed at this point? By the trend determination, we still don’t have a broken long-term uptrend. Instead, we have a top confirmation consolidation.

We are always using the top-down trading analysis and the weekly chart is revealing the strong uptrend support at the 2600 level as it is explained on the monthly chart. The reaction on this level is important for the next leg in this instrument. So looking form a trader perspective, this is good for the risk to reward long-trade entries. Obviously, risk rewarding short trade entries are not good here. And since the traders are always searching for the best risk to reward trade entries we can just guess in what direction will the price action go. The S&P500 is the most comprehensive Stock Index for the US stocks and by judging on it we do not expect the steep fall in the stock markets, because we mentioned already risk to reward trading possibilities. We are analyzing this from a traders perspective.

Looking at the specific individual stock like General Motors, for example, we can see that it is forming a giant bullish flag which is still forming and we can expect one more leg higher from here and especially on a daily close above the 38 level which will soon be tested judging by the price action. So, also in this chart, you can see that we have a bounce from the uptrend line and this as well is a nice risk to reward long trade opportunity. If you go long your risk will be between 5-8$ per stock and the reward is up to 20$.

 

The main conclusion of this technical analysis insight is that in the medium-term you have a higher probability of long trade entries then short trade entries. Always make a distinction between a technical analysis and a trading technical analysis.

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