technical analysis US500

Technical analysis of US500

US500, the representative CFD based on the S&P 500, has been somewhat volatile since last night’s American presidential debate. The debate was bitter and chaotic, without any clear result, although partisans on both sides have claimed victory. Stock markets have generally reacted negatively to the tone of the debate. Meanwhile covid-19 infections continue to increase in most major economies, bringing with them possible new lockdowns and restrictions that might affect various constituents of US500.

High resistance here is the all-time high of 3,588 at the start of the month, while the main support seems to be the most recent low around 3,226. Moving averages will probably be in greater focus though over the next few days; new highs in the near future don’t seem to be likely. We can also probably expect higher volatility to come as the pre-election period starts in earnest.

Technical indicators on US500 H4

 

Moving averages give a sell signal, with each of the 50, 100 and 200 SMAs successively below slower lines. However, price has moved above the 50 SMA from Bands and remained above it since then after the recent unsuccessful test of the 100 SMA. The main resistance in the short term then is the 100 SMA, but the 200 will also be important if the former is broken.

There is currently no signal as to saturation from either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5). However, the latter at about 69 remains close to overbought. Volumes remain fairly consistent with the average over the last few weeks but of course not nearly as high as during the losses of the first week of September.

Price action and Fibonacci

 

This morning’s inverted hammer is unlikely to be a very reliable signal in the context given the volatility that typically surrounds presidential debates. Notice that the current period also features a long tail compared with most of the rest of the chart. Due to the crucial releases to come this week – most importantly Friday’s NFP and this afternoon’s quarterly GDP – price action should probably not be depended upon too much until next week.

Given how far US500 had extended beyond the daily Fibonacci fan, which is now below the bottom of the chart, a retracement had seemed likely at the end of last month. The question now is whether there’s going to be a retest of the latest low around 3,226. Today’s attempt to move below the 23.6% Fibonacci retracement area based on the four-hour chart appears to have failed (for now): this area is likely to be in focus for further movement if it’s tested again this afternoon or around the NFP on Friday.

Technical analysis of US500: summary

 

The technical picture for US500 looks fairly positive in the short term considering the fundamental circumstances; however, looking at the bigger picture, things are less rosy. The importance of this week’s data makes it difficult to derive a clear signal from TA here. Traders will probably focus instead on key areas on the chart and how price behaves around them at the times of the most important releases.

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