Chart of the day Further potential downleg for SP 500 within range configuration

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By :  ,  Financial Analyst

Short-term technical outlook on U.S. SP 500 Index (Thurs, 22 Feb)

Key technical elements

  • The minor corrective rebound of the U.S. SP 500 Index (proxy for the S&P 500 futures)  from 19 Mar 2018 U.S. session low of 2693 has met the lower limit of its expected target/resistance of 2740/60 zone (38.2% Fibonacci retracement of the decline from 13 Mar 2018 high to 19 Mar 2018 U.S. session low, the former minor range support of 15/16 Mar 2018 & the minor descending trendline from 13 Mar 2018 high).
  • Medium-term downside momentum of price action remains intact as the daily RSI oscillator has continued to inch downwards below its corresponding pull-back resistance at the 60% level and still has potential room to manoeuvre to the downside before it reaches an extreme oversold level of 25%.
  • The Index is now undergoing another round of potential downleg within a medium-term “Symmetrical Triangle” range configuration in place since 06 Feb 2018 low (depicted in dotted pink) towards its next intermediate support at 2660 (minor swing low area of 02 Mar 2018 follow by the medium-term support of 2600 (lower limit of the “Symmetrical Triangle” & the 76.4% Fibonacci retracement of the previous up move from 06 Feb 2018 low to 13 Mar 2018 high) (see daily & 1 hour charts).
  • The hourly Stochastic oscillator has already reached an extreme oversold level of 6% where the Index faces the risk of a minor bounce at this juncture towards the intermediate resistance of 2711 (former minor range support of 21/22 Mar 2018).  

Key Levels (1 to 3 days)

Intermediate resistance: 2711

Pivot (key resistance): 2740

Supports: 2660 & 2600

Next resistances: 2760 & 2780/2800


Therefore as long as the 2740 key short-term pivotal resistant is not surpassed, the Index is likely to shape another potential downleg to target the next support at 2660 and a break below it opens up scope for a further potential down move to test the medium-term “Symmetrical Triangle” range support of 2600.

On the other hand, a clearance above 2740 should put the short-term bearish tone on hold for a further extension of the corrective rebound towards 2760 with a maximum limit set at 2780/2800 (76.4% Fibonacci retracement of the recent decline from 13 Mar high to 19 Mar 2018 U.S. session low &  “Symmetrical Triangle” range resistance).

Charts are from City Index Advantage TraderPro 


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