Black lines-bullish channel
SPX is breaking out of the bullish short-term channel. This is a sign of weakness. Price should remain under pressure for the next few sessions. The RSI provided warning bearish divergence signals in the 4 hour chart and we are now seeing the reversal under way. SPX is vulnerable to a pull back towards 3,900-4,000. Such a pull back will not put in danger bull's hopes, but a deeper one will increase the chances that a major top is in. This post is to focus on the near term dangers of a pull back. Bulls should be prepared for a pull back towards at least 4,000. The RSI is turning lower from overbought levels. At least a day or two is needed for the RSI to reach the middle of the range or the oversold area.
