Gravestone Doji's in US Indices
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: A technical top and reversal pattern has formed in S&P 500 and Nasdaq 100
During Tuesday's trading session S&P500 formed a Gravestone Doji. (Market opened and closed in almost same price at the low end of the candle with a tall upper shadow i.e. Buyers tried pushing market higher from the open, only for sellers to take control)
It was followed by a bearish day yesterday with the Index drawing a Bearish engulfing candle engulfing the body of both Tuesday and Monday trading session under heavy volume..
This formation indicates we are likely to see a correction. RSI is not showing any divergence however, which signals that we could see higher levels later after a likely correction.
A correction that could take the Index down to around 4.450. The correction scenario will be demolished and reversed if S&P500 trades above the high of the Gravestone Doji at 4.598.55.
Nasdaq 100 waited another day before it also formed a Gravestone Doji. Today’s trading session can be very interesting. A correction down to around 15.140 is not unlikely. Some support at around 15.330