We can zoom the perspective closer by seeing the 5-min intraday chart:
From July 22nd to present, price has crept its way from 1,975 to the current 1,900 and the index may throw one “last gasp” straight up into 2,000 to defy these divergences and continue the trend of money flow into the stock market.
Remember, price that breaks higher when logic and charts suggest otherwise is often fueled by short-sellers (bears) buying-back to cover losing positions when the market does the opposite of what they think it will.
Aggressive traders can position into unexpected breakouts and profit from the losses of those on the wrong side of price action (the same is true in reverse for a market that trades lower despite positive divergences).
For now, do note the divergences, do add some caution into your bullish trading, and don’t be surprised to see a pullback lower back toward 1,975 or lower should price break under the rising trendline near 1,987 currently.
This article is brought to you courtesy of Corey Rosenbloom from Afraid to Trade.