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As the markets brace for both the U.S. election and an FOMC meeting this week, investors are closely watching the S&P 500 to see if it will hold above the critical 5,700 level. This threshold could be the difference between a new bullish uptrend or a prolonged trading range. Here’s what you need to know about the current market setup and key signals to monitor.
 

Key Insights:

• The Importance of the 5,700 Level: The S&P 500 has shown strong support around 5,700. A sustained move above this level could signal the start of a fresh uptrend, while a breakdown might lead to a larger trading range, potentially between 5,300 and 5,700.
• Bearish Signals to Watch For: As discussed last week, we’ve seen increased supply levels and bearish bars, including a significant sell-off last Thursday. If this bearish momentum continues, the market could face short-term downside pressure.
• Historical Analogs from 2016 and 2020: Past patterns can sometimes offer clues to future movements. Similar to 2016 and 2020, we’re entering a period of heightened volatility due to major events. If history repeats itself, we might see a bullish reversal following the election and FOMC meeting.
• Potential Bullish Scenario: If demand kicks in at the 5,700 level and we see a strong close above it, this could be a bullish sign. A rally past this zone would suggest that investors are confident in a continued uptrend.
• How the Election and FOMC Could Impact the Market: Both events are likely to trigger short-term volatility. Positive outcomes might spur a rally, while uncertainty could cause consolidation within the current range.

Watch the video below to find out the detailed analysis of the above using the Wyckoff method:

Video Length: 00:05:03

With so many factors at play, it’s crucial for investors to stay alert and watch for these key signals. As the S&P 500 navigates these levels, the market could be setting up for its next major move. It is essential to stick to a trading plan to ride through the potential massive rally based on the presidential election pattern as discussed in this post.

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