Traders are glued to a key level on the charts

pulse

October 11, 2018 6:16 PM

Traders are paying close attention to key technical levels, and right now the 200-day moving average is in focus. The S&P 500's 200-day moving average has been tested three times this year, and has so far managed to hold.

US stock markets on Wednesday faced their worst sell-off since February.
Traders are paying close attention to key technical levels, and right now the 200-day moving average is in focus.
The S&P 500's 200-day moving average has been tested three times this year, and has so far managed to hold.
The Nasdaq has already plunged below the technical level for first time since June 2016.

determine the overall trend of the market. The market is in an uptrend as long as it's above its 200-day, and it's in a downtrend if it's below the measure.

"The S&P 500 is testing the 200 day moving average," said Hussein Sayed, chief market strategist at FXTM, an online forex trading broker.

So what happens if the market falls below the 200-day moving average and stays there? We can look to

the day the country's benchmark Shanghai Composite index fell more than 8%.

The S&P 500 quickly tumbled into a correction, down more than 10% from its recent high, after sliding below its 200-day moving average. Shares would make back nearly all of their losses before taking out those lows a few months later. The drop extended to a total of more than 15% by February. The benchmark index wouldn't make a new high until June, just after the UK's

He better start paying attention.

Now read:

'The 4 horsemen of the apocalypse': What Wall Street's biggest firms are telling clients about the stock market's sell-off
The market is doing something rarely seen over the past 20 years — and it could mean the meltdown is just getting started
Two-thirds of the stock market has tumbled into a correction — and that could be signaling that the worst is yet to come

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