SP500 Forms a Consolidation Triangle

US stock markets dropped on Monday, but the dip was bought and the SP500 index was 0.50 per cent stronger during the London session on Tuesday, trading near 2,760 USD.

It seems as if the price is moving in a consolidation triangle pattern, which could be traded on both sides. Should an upside breakout occur, it could mean that the latest sell-off might be over. However, if the price breaks down from this triangle, the decline could resume.

The upper line of this triangle is currently near 2,770 USD and if the price jumps above, we could see an upward move toward 2,800 USD.

On the downside, the lower line of the triangle is near 2,750 USD and if this is broken, further decline from last week's lows of 2,710 USD could occur.

Therefore, the near future of the SP500 index will most likely be decided when this triangle is broken on either side, with volatility expected to rise soon after.

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