On the daily chart below, we can see that we got another selloff once the market broke below the key level at 11492. The fall started as troubles with the Silicon Valley Bank started to flow via newswires and there were talks of a bank run.
Sure enough, the next day the bank collapsed, and we got the last selloff. On Monday, thanks to the swift actions taken by the Treasury and the Fed to calm the markets and the banking sector, the market rebounded as fears of a banking crisis started to dissipate.
The buyers stepped in aggressively thanks also to the record fast easing in financial conditions with yields returning back to the levels seen before the February NFP.
On the 4 hour chart below, we can see that the setup for the buyers is starting to look interesting. The market bounced right at the 61.8% Fibonacci retracement level of the whole upward move since the start of the year. The price is also breaking above the downward trendline.
This may be a bullish flag pattern and if confirmed, the target would be the 13150 resistance. The strong rally since Monday though got a bit overstretched as we can see from the distance between the price and the blue short period moving average. It’s likely that we will get first a pullback, maybe back again to the 11492 level.
On the 1 hour chart below, we can see more closely the breakout. The last line of defence for the sellers will be the swing resistance at 11829 as a break above would confirm the bullish flag pattern.
If we get the pullback, the buyers are likely to pile in at the minor upward trendline near the 11492 support where we will also find the red long period moving average. If the price break below that strong support zone, the sellers will start to jump in and try to regain control pushing the price to new lower lows.
