Technical analysis of US500
US500, the representative CFD based on the S&P 500, appears to have broken out upward today. Hopes of further stimulus from the Fed and of a vaccine for covid-19 to become available possibly within the next few months have boosted sentiment on US500 and various other indices around the world. Today’s technical analysis of US500 looks at the four-hour chart and gives a brief outline of how you can add this symbol to your Exness MT4 or MT5 and trade it.
This week’s earnings reports so far have been somewhat positive, with all of IBM, Coca-Cola, Lockheed Martin and Philip Morris International beating estimates for earnings per share slightly. Markets are generally pricing in positive surprises from upcoming reports later in the week, including Tesla, Amazon, Microsoft and others.
High resistance here could be the all-time high of this CFD around 3,392 just before the crash in the second half of February. Low support seems to be the depth of the latest retracement around 3,000. Moving averages and the Fibonacci fan are likely to provide supports before that relatively low area might be tested, though.
Technical indicators on US500 H4
Moving averages continue to print a strong buy signal, with all three of the 50, 100 and 200 SMAs successively above each other. The 100 SMA has also extended the space from the 200 this week. The first key zone of support is the 50 SMA around 3,200; below this, the value area between the two slower lines might be the source of another upward wave in the event of a fairly deep retracement.
US500 is now clearly overbought. Price is outside the upper deviation of Bollinger Bands (50, 0, 2) and the slow stochastic (15, 5, 5) at around 95 is close to the maximum reading. The decline in volume over the last few periods seems to confirm the likelihood of a retracement downward and possibly consolidation in the near future.
Price action and Fibonacci
The three soldiers during Monday’s European session would usually be seen as confirming more gains to come. However, as noted above, the current situation of buying saturation means that this would be a risky place to join such a movement. The near-doji on Monday night from 20.00 GMT suggests a degree of hesitation.
The daily Fibonacci fan here continues to provide a fairly strong support from the 38.2% zone. While it’s possible for a strongly trending market to hold consistently above this area, most traders other than those focussing on the very short term might prefer not to buy strength in this context: fundamentals and sentiment are still quite fragile.
Technical analysis of US500: summary
Overall the technical picture for US500 is positive and more gains could be expected this week. The main concern for medium- and long-term traders is a sudden change in sentiment which might be caused by disappointing earnings results, a sudden spike in covid-19 cases or any other major event that could give participants cold feet.
How to trade US500 with Exness
Your screen will then look something like this, with all of the symbols available on the left of the screen in Market Watch. Simply scroll down Market Watch and find US500m, then double click on it to open the chart. If you prefer, you can instead go to File > New Chart > Indices_group and select US500m from there.
Once the chart’s open, press alt+t to show the trade panel, choose the size of your position, then click BUY or SELL. Your position for US500m will now be open:
Leverage for this symbol is fixed at 1:100, so the margin for a micro lot (0.01 lot) will be around 35 US cents or the equivalent in the currency of your account if different. If this is the first time you trade an index, it’s strongly recommended to practise with a demo account first before you risk real money on a new instrument.
Thank you for reading Exness Education’s technical analysis of US500! Please join us again on Thursday and Monday for our weekly preview of data. Don’t forget that you can ask us to write about a symbol here by leaving a comment on Facebook.