Technical Update - Three White Soldiers rebound in US Indices
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
Summary: Past three trading days have formed a Three White Soldiers like pattern indicating a fourth exhaustive trading day to follow.
S&P500 the rebound seems strong. Past three trading days have formed a formation what looks like “Three White Soldiers”.
It is rare pattern often seen when market rebounds. (The Hammer candle indicated a bottom and reversal)
The soldiers are often followed by a fourth minor positive day, whereafter price usually tumbles.
The falling volume during the Three Soldiers pattern indicates the rebound is weak and that it is not unlikely to exhaust in a couple of days.
Further, RSI is still below 60 threshold. A daily close above will confirm short term uptrend. However, if RSI fails to close above 60 there is a great risk the above “price tumbling “ scenario after the three white soldiers will unfold.
Resistance at 4,224 and strong resistance at 4,300.
Almost identical picture on Nasdaq 100. Volume falling during rebound indicates weak trend. Strong resistance at around 13K and at 13,543. If gap between 26th and 27th is closed selling pressure is likely to resume.
Dow Jones Industrial has experienced four positive trading days in a row. It is not unlikely to experience another one but upside could be limited with resistance at 33,637. Volume has been falling indicating a weak rebound. Volume needs to return to keep for the Index to keep upside momentum.
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