The S&P may be in the process of forming a 1-2-3 reversal. It broke the down trend line during the recent rally and is now in the process of testing support. For you trader types this is the lowest risk entry on the long side. You could place stops slightly below the previous lows at 1040 and risk less than 2% on the trade.
If the market does hold support and rally from here your risk reward ratio would be very large. There are large momentum divergences forming in RSI and and MACD.
Hint: The least risky trade is to buy below support. If you end up being wrong your risk is even less than 2% and you may catch the bottom of a 2b reversal.
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