On the daily chart below, we can see that the broken trendline is still acting as support for the market. The market sold into it last Friday as the Silicon Valley Bank failed and triggered a widespread risk aversion which weighed on risk assets.
On Monday, we got another sell into the trendline as the market was still uncertain on the banking sector but rebounded as everything calmed down.
Yesterday, we got yet another selloff into the trendline as the fear spread to Europe with Credit Suisse bank under stress, but later on the market rebounded as the SNB offered support for the bank.
All of this just shows that the trendline support is very strong and it’s something that the sellers will need to break to get conviction on more downside and make the buyers fold.
In the 4 hour chart below, we can see that now we have another range between the trendline support and the 3971 resistance where we can also find the 50 and 61.8% Fibonacci retracement levels. The buyers will need to break above that resistance zone to start getting some conviction on an extension to the upside, but the downward trendline could be another place where the sellers may lean on.
In the 1 hour chart below, we can see more closely the current range. Looking ahead we have the FOMC meeting next week where the Fed is expected to hike by 25 bps. The market may keep ranging until then.
Generally, it’s better to sit out when the market starts to range and wait for a breakout or a catalyst strong enough that can give the necessary momentum to break out of such ranges.
