Trading Rule: When market breaks down below a well defined support, then pullback to the previous support is a shorting Opportunity
As you can see in the chart above: 100 dma was a solid support for the index for more than a year now and the breakdown below 100 dma this time appears decisive.
What happened today?: A Steep Rally
How does the chart look now?
As you can see above: the pullback has been to 100 dma. The question: Is the pullback to test 100 dma as resistance or this pullback marks the end of the downtrend? .
Trading Rule: In Strong Bull markets: there are false Breakdowns. It means market breaks down first and then quickly erases all the loss and climbs back above the support.
If S&P500 continues with rally over next few days – then this breakdown would be considered as false breakdown and market then would resume uptrend
Well, next few days – that’s the answer market needs to discover. So, it would be premature to celebrate. Keep an eye on what market does next from here on
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