S&P 500 Technical Price Outlook: Near-term Trade Levels
- S&P 500 technical trade level update – Daily & Intraday Charts
- SPX500 breakdown approaching key technical zone- risk for inflection
- Resistance 4493, 4521, 4592(key) – Support 4245, 4197 (critical)
The S&P 500 plunged more than 12.4% off the monthly highs with the index rebounding off downtrend support last week. The focus is on this recovery off the lows with the rebound now targeting downtrend resistance. Is a low in place? These are the targets and invalidation levels that matter on the SPX500 technical price charts heading into the February open / non-farm payrolls this week. Review my latest Strategy Webinar for an in-depth breakdown of this SPX500 setup and more.
S&P 500 Price Chart – SPX500 Daily
Technical Outlook: In my last SPX500 technical outlook our bottom line noted that the, “Risk remains for a larger washout while within this formation and we’re looking to validate a near-term low next week.” Indeed a low registered just days later with the index plummeting to 4222 before rebounding sharply. The decline & recovery keeps SPX within the confines of the descending pitchfork formation we’ve been tracking of the yearly high with the recent rally now breaking above the median-line.
S&P 500 Price Chart – SPX500 240min
Notes: A closer look at SPX price action shows the index breaking out of a near-term consolidation pattern at the lower parallels with the rally now approaching initial resistance levels at the December lows at 4493 and the 75% parallel / 50% retracement at 4521– an area of interest for possible topside exahustion. Ultimately, a breach / close above the upper parallel / 61.8% Fibonacci retracement of the yearly range at 4592 would be needed to suggest a more significant low is place / validate a larger reversal. Support remains steady with the May high at 4245 with a break lower looking to challenge a more significant zone at the 23.6% retracement of the 2020 advance at 4197.
Bottom line: A recovery off downtrend support has us looking for a reaction into downtrend resistance. From at trading standpoint, look to reduce long-exposure / raise protective stops on a stretch towards the upper parallels – pullbacks should be limited to today’s low (4404) IF price is heading higher with a close above 4591 needed to mark resumption of the broader uptrend. Stay nimble heading into the monthly open with US ISM data and Non-Farm Payrolls (NFP) on tap into the close of the week.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
S&P 500 Trader Sentiment – US500 Price Chart
- A summary of IG Client Sentiment shows traders are net-long the S&P 500- the ratio stands at +1.75 (63.21% of traders are long) – typically bearishreading
- Long positions are15.44% higher than yesterday and 3.54% lower from last week
- Short positions are 9.77% higher than yesterday and 0.47% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US 500 prices may continue to fall. Trader are more net-long than yesterday but less net-long from last week. The combination of current positioning and recent changes gives us a further mixed US 500 trading bias from a sentiment standpoint.
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-Written by Michael Boutros, Currency Strategist with DailyFX
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