Bullish Rally Potential and Key Support Levels
The weekly candle's formation closely resembles the patterns that have historically preceded bullish rallies, as illustrated in the chart. While I anticipated further declines on Monday before a rebound, the market actually bounced due to oversold breadth as indicated by the McClellan Oscillator. Price remained in consolidation on Tuesday, and the anticipated additional dip occurred on Wednesday, followed by the expected bounce.
Beyond the weekly levels, the 20-week moving average provided robust support, reinforced by its confluence with the lower edge of volume shelf “A”. This expanding shelf is likely to offer support during any short-term volatility related to interest rate cuts. Additionally, the annual support level indicated in the chart proved effective in bolstering prices.
The Federal Reserve's decision will significantly influence the magnitude of the subsequent move. A 50 basis point rate cut would likely be extremely bearish, as historical precedent suggests. Even with a temporary post-news rally, a 25 basis point cut is currently more anticipated and could lead to a market development similar to 2019.
The next potential target for this bullish move, and the key level to hold for the bullish case. $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2412(ESmain)$
https://smartreversals.substack.com/p/the-expected-bounce-happened-whats?utm_source=profile&utm_medium=reader2
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