We recently saw a rare diamond pattern on the S&P 500 index, forming along with several other technical arguments of interest.
The market is now breaking that area, but is it enough to attract sellers and refresh the downtrend lower?
![S&P 500 Index (US500 CFD) Chart by TradingView](https://bpcdn.co/images/2023/10/18183846/US500-2023-10-18-780x431.png)
S&P 500 Index (US500 CFD) Chart by TradingView
G’day stock traders! As mentioned above, we have quite an interesting view on the charts today with a rarely seen diamond pattern forming on the four-hour chart of the S&P 500 Index. This is a type of consolidation pattern where traders look at both long and short setups after the pattern breaks.
This formation occurred right at the falling moving averages, Fibonacci retracement area, and the August swing low around the minor psychological area of 4350.00. So, it’s actually no surprise that bulls and bears battled it out to a stalemate in early October, trying to figure out where to go next.
Currently, it looks like the bears are gaining control as we can see a breakout of the diamond to the downside, which may attract more sellers and continue the decline.
If so, that fresh selling pressure may be enough to take the market back to the previous swing low around the 4200.00 key psychological level before buyers start showing up to take profits and/or make contrarian plays.
Of course, we must consider that this could be a fake in the making, with buyers starting to catch the dip and turn the October bounce into a real reversal move that could push the market back to the strong resistance area around the. 4500.00 major psychology area.
As always, it’s the news headlines, economic data and market stories that will determine who wins between the bulls and the bears, so it’s probably a good idea to keep up with market trends by looking at our Daily News and Watchlists, economic calendar. and Event Guides before choosing a bias and working on your risk management plan!