Chart of the Day - Monday, October 19th, 2020

Today’s Chart of the Day was shared on Twitter by Mike Moses (@DominickMike). It's a 15-minute candlestick chart of the S&P 500 over the past two months. One of the most basic concepts in Technical Analysis is the Principle of Polarity. This is the simple idea that former resistance tends to act as support. As you can see, price is currently retesting a former resistance level around 3425. This level acted as a ceiling for the majority of September, but we finally broke above it in early October. According to the Principle of Polarity, this former resistance level should act as support here. If it fails to hold, it would be a red flag that more downside lies ahead. Either way, the outcome from this retest will provide us with valuable information, so keep an eye on how price behaves around this key level throughout the week.