SP500 Jumps Higher Supported by a Big Inverse Head and Shoulders Pattern

By Tomasz Wisniewski|

Published: October 24 2022, 12:56 GMT+0

SP500 Jumps Higher Supported by a Big Inverse Head and Shoulders Pattern

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Indices ended last week with gains, and that’s also how they start the new week. Ok, maybe not all indices, because Asia is swimming in a sea of red, but definitely the American and European ones, which are looking really good.

In today’s piece – we’re looking at the SP500, where we can see a really nice bullish price action pattern. SP500 is currently climbing higher influenced by the Inverse Head and Shoulders pattern (yellow). What’s great here is that the bottom of the head is precisely on the 50% retracement of the recent, post-Covid up-trend.

On Friday, the price managed to climb above the neckline (blue), which in theory, activates this formation and brings us a buy signal.

The first target is on the green downtrend line, which connects lower highs since mid-August. In case the buyers succeed, the next target will be on the upper line of the long-term wedge (green), which is above 4000 points.

The positive sentiment stays with us as long as the price stays above the neckline. In case the price drops below, the buy signal is cancelled, but currently, chances for that happening are rather limited.

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