US stock indices are recording one record high after another these days!
But is it time for a major decline in the S&P 500 soon?
Check out the turning points I’m watching on the 4-hour time frame:
S&P 500 Index (SPX500) 4 Hours Chart by TradingView
The Fed’s easing efforts and strong stimulus measures from China seem to have brought life back to the US stock markets recently!
In fact, the S&P 500 rose to new highs this week as Federal Open Market Committee officials continue to express support for further cuts in borrowing costs. Ultimately, the possibility of lower interest rates in the future could bring further upside for business and consumer activity.
Can this stock index maintain its rise beyond this ceiling in the near term during the stock index release? US core personal consumption expenditures price indexthough?
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. Assuming you still haven’t done your homework on the US stock market and overall risk sentiment, it’s time to check the economic calendar and stay up to date with daily fundamental news!
The S&P 500 formed higher lows and slightly higher highs, creating a rising wedge pattern that has held since August. The indicator is now hovering at the wedge resistance level, still deciding whether to bounce or break out.
The 100 SMA is above the 200 SMA, indicating that the path of least resistance is to the upside, possibly taking the indicator higher at the same height as the chart formation. If the top of the wedge remains a ceiling, on the other hand, the S&P 500 could pull back to nearby support areas marked by a Fibonacci retracement tool.
In particular, the 38.2% level is in line with S1 ($5,629.22) and a previous short-term resistance area, while the 50% Fibonacci level is close to the key psychological support at $5,600 and a dynamic inflection point at the 200 SMA. The 61.8% Fibonacci level coincides with S2 ($5,554.68) and the bottom of the wedge.
It is best to keep your eyes open for reversal candlesticks that indicate a bounce around these levels if you are waiting for an opportunity to jump into the upside.
Whichever way you decide to run this setup, be sure to practice proper risk management and check out our currency correlation tool!