Sunday, October 20, 2019
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Technical Analysis – Is the S&P 500 forming a double top pattern?

The S&P 500 stock index registered three negative weeks in a row and the short-term trading may not get any better yet as the technical indicators keep flashing bearish signals; the MACD has dropped into the negative area and is currently looking stable below its red trigger line, while the RSI seems ready to reverse lower after touching its 50 neutral mark.

The 2,815 level looks to be the neckline of a double top formation and therefore any decisive close under that threshold could warn of a trend reversal, with a confirmation probably coming below 2,728. Before that, the price would need to clear the 23.6% Fibonacci of 2,860 of the up-leg from 2,332 to 3,027.

On the upside, the bulls should pass through the 3,000 level and break the 3,027 record high to upgrade the broader positive outlook. In this case, resistance could appear near 3,184, identified by the 161.8% Fibonacci extension of the short down-leg from 3,027 to 2,777.

Meanwhile, in the three-month window, the index is holding a neutral status, with the flattening 50-day simple moving average (SMA) reducing the odds for an outlook improvement.

In brief, the S&P500 stock index is lacking bullish signals at the moment and seems to have formed a double top pattern with a neckline around 2,815, a break of which could downgrade the outlook both in the short and the medium-term picture.


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Disclaimer:
This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.


Source: XM

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