SMI - Israel-Iran ceasefire rally - See the key resistances and supports to assess the medium-term and long-term outlook.

US President Donald Trump announced Monday evening a ceasefire between Iran and Israel. Today, the European stock markets rallied on this news. The SMI rose by 1.8% in today’s opening. This rally is the strongest since the top on June 11 at 12398.08. This rally allows me to better assess the bullish and bearish odds. The following observations can be made from the chart below.

THE BULLISH OUTLOOK (38% odds): Today’s opening rally reached the resistance cluster around
12065-12080. A break of this level would trigger a short-term BUY signal. The SMI could rise to 12145-12180 or 12215-12245. A break of 12245 would indicate that the medium-term trend is turning UP again. This would trigger a medium-term BUY signal. Thereafter, the SMI could rise to a new high above 12465 and possibly rise to the all-time high at 13199. This would confirm that also the long-term trend is resuming.
Investors and traders could BUY with the breaks of the resistances.

THE BEARISH OUTLOOK (62% odds): Today’s rally is a simple countertrend rally that retraces part of the decline from June 6 to June 23. The 50% retracement is at 12110 and the 61.80% retracement is at 12180. The SMI is likely to turn DOWN again from one of these retracement levels. The bearish outlook is presently favored because the present rally could be a simple test of the NECKLINE of what could be a major HEAD and SHOULDERS TOP. The top began forming in late April. If indeed this is a test of the neckline, then the SMI is likely to resume the downtrend from the May top and decline to the supports that I provided in the Chart Outlook of June 23, on page 10. These supports are at 11900, 11810, 11785, 11695, 11504, 11369 or 10910 or 9950. The bearish scenario would be confirmed with the break of the first three supports.
Investors and traders could SELL with the breaks of the supports.