Yesterday brought significant changes in the indices, with the S&P 500 hitting long-term highs before collapsing sharply. This dramatic shift was triggered by the latest inflation data from the US. The sharp reversal has cast doubt on further bullish potential, paving the way for a bearish correction. The price broke the short-term uptrend marked by black lines and is now forming a sideways trend within an orange rectangle, indicating a likely correction period.
Many traders were misled by yesterday's rise, which may be seen as a false bullish movement. Given the current setup, it seems there are higher chances of a bearish breakout from the sideways trend. The initial target for this potential breakout is the first blue horizontal support. Should the price break through this level, the second blue line presents itself as the next target.
Conversely, a breakout to the upside from the sideways trend would signal a buy, with confirmation coming if the price climbs back above the black uptrend line. However, given the present circumstances, the positive scenario seems slightly less probable.