Technical overview: S&P 500

Summary:
- Wall Street extends recovery
- US500 trades close to 78.6% Fibo level
- Index is trading within an ascending wedge pattern on the lower frame

The ongoing rebound on Wall Street is really strong and the US500 index (S&P 500 futures underlying) managed to add over 20% since the December’s trough. Taking a look at the weekly interval, one can see that the downward impulse was halted by the upward sloping trendline and 200-week moving average. Moreover, it should be noted that the absolute scale of the October-December sell-off (in terms of points) was over twice as big as the corrections from 2011 and the turn of 2015/2016.

Source: xStation5

On the daily frame one can see that US500 is approaching the 78.6% Fibo level of the latest downward wave. Local highs from October and November can be found in this area as well therefore bulls may find it a bit harder to overcome.The 200-session moving average running in the 2750 pts area can be seen as the first support level for buyers in case a bigger pullback should occur. Channel formed by 50-session moving averages (red lines) can be seen as the next potential stop in line.

Source: xStation5

Moving onto the intraday chart, it is hard not to see that the index is trading within an ascending wedge pattern. Such a price schemes heralds a break lower and given diminishing volatility, the risk of correction occuring is growing everyday. Moreover, the price is approaching the resistance zone ranging 2815-2820 pts which may limit further upside. A break below the 50-period moving averages channel could be seen as the first signal potentially confirming deeper correction.

Source: xStation5

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