S&P 500 echoing bearish vibe at all-time highs

Aaron Hill FP Markets

Following a surprise beat from Friday’s non-farm payrolls, the S&P 500 concluded the first trading week of the year on the back foot and snapped a nine-week winning streak. Attention now shifts to Thursday's US CPI inflation release at 1:30 pm GMT.

Technical landscape favours bears, at least in the short term

Unquestionably, the market average has exhibited a clear-cut uptrend since breaking out north in 2013 on the monthly chart. And we are fast approaching the all-time high (ATH) of 4,818, with obvious support calling for attention as far south as 4,102.

Meanwhile, out of the weekly chart, you will note that the unit has pencilled in what many technical analysts would refer to as an Evening Star candlestick formation: a bearish cue. Although this timeframe also demonstrates a clear uptrend (alongside the monthly chart), the bearish candlestick formation, together with resistance at 4,743 and negative divergence from the Relative Strength Index (RSI), echoes a downside bias that directs focus to support coming in at 4,595.

The daily timeframe, although also trending northbound, recently manoeuvred south of support from 4,725 and is, as of writing, testing the grip beneath the level as a possible resistance. This is a move shining the technical headlights on daily support from 4,653, and a break under here would expose daily support from 4,578 (set just beneath weekly support mentioned above at 4,595).

Direction?

Under weekly and daily resistance between 4,743 and 4,725, respectively, short to medium-term direction favours bears at the moment. Daily support at 4,653 serves as a logical downside target, though overwhelming bids here opens the door for further underperformance towards weekly support from 4,595.

Charts: TradingView

Author

Aaron Hill

FP Markets

After completing his Bachelor’s degree in English and Creative Writing in the UK, and subsequently spending a handful of years teaching English as a foreign language teacher around Asia, Aaron was introduced to financial trading,

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