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

S&P 500 is likely to resume its downleg below 2740 resistance within its medium-term "Symmetrical Triangle" range configuration.

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 


Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.