The risk of escalation has emerged again after the failure of talks with Pakistan on Friday and Donald Trump’s plan to block the Strait of Hormuz. This was reflected in oil prices, which were once again approaching the $100 level, but during European trading the S&P 500 maintained last week’s gains rather than retreating.

From false breakthrough to reversal

The recent uptrend can be understood by looking at what came before. Price breaks out of an apparent support level, then quickly reverses direction and returns to that level, creating what is known as a false breakout. These moves are important because they not only affect prices but also trader positions, as sellers find themselves in the wrong position and are forced to cover their positions when the market moves against them.
The ensuing recovery was hesitant, but buyers came in with force, pushing prices above resistance and regaining upward momentum, suggesting more than just a temporary bounce. When the market shifts from accepting low prices to rejecting low prices, its behavior changes, and this is what we start to see.
The focus now is not on movement speed, but on the ability to withstand challenges.

US500 Daily Candlestick Chart

Past performance is not a reliable indicator of future results

Recovery trend line is key test for buyers

Over a four-hour time frame, this behavioral shift began to occur. The previous downtrend line was broken and restored, and the price began to form a series of higher lows and move towards the overhead resistance. Markets that have been trending downward are starting to establish higher bases, at least in the short term.
The recovery trendline provides an important framework for understanding this shift. Each corrective move since the reversal has found support at progressively higher levels as the price respects this bullish structure rather than returning to the previous range. Although the increase is not dramatic, it is orderly and if it continues, it will be more sustainable.
Therefore, attention is focused on the price action around this line. If buyers maintain control, the pullback is expected to be absorbed, reinforcing the view that recent moves represent a true shift in trend. If this line is broken, it could indicate weakness in momentum and the market may need more consolidation before rising again.

$500 Candlestick 4 Hourly Chart

Past performance is not a reliable indicator of future results

Disclaimer: This article is for educational purposes only. The information provided does not constitute investment advice and does not take into account any investor’s personal financial situation or objectives. Any information that may be provided regarding past performance is not a reliable indicator of future results or performance.

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