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Technical Update - S&P 500 and Nasdaq: Is the rebound just a bull trap or a return to Bull market

Equities 5 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank

S&P 500 closed the gap last week, jumped to next resistance, closed above that one and is now set for test of next at 4,177. Expect a minor correction from that resistance level before uptrend resumes to test 4,300. Rising volume and positive RSI without divergence support the short-term bullish picture
With the 200 SMA and medium-term falling trend line coming down around 4,300 that level should be considered to be a strong resistance level. providing resistance.
For S&P 500 to reverse its uptrend a close below 3,910.

SP500 d 1 aug
Source: Saxo Group

Weekly chart S&P 500 is trading in a wide falling channel close to break bullish out of. However, even if S&P 500 breaks above 4,300 August is going to be a very interesting month. If S&P 500 closes the month below 4,164 medium- to long-term bear trend is likely to resume and the current uptrend would merely just be a Bull trap. Watch out for where RSI is at then end of August; has is closed above or below 60 on the weekly time period at any time during the month of August? If rejected bear trend is likely to resume.

SP500 w 1 aug
Source: Saxo Group

Nasdaq 100 closed above key resistance at around 12,897. The uptrend is supported by rising volume and higher RSI values without divergence, the Index is set for higher levels short term. Next resistance is around 13,566-13,650
A close below 12,051 will reverse the short-term uptrend.

Nasdaq 100 d 1 aug
Source: Saxo Group

Nasdaq 100 is testing medium-term falling trendline. A weekly close above there is room for higher levels.
RSI has broken its falling trend and if it closes above 60 it has turned bullish. However, 55 SMA is declining i.e. underlying medium-trend is bearish. This relief rally could merely just be a Bull trap. Keep your stops close and be disciplined.

Nasdaq 100 w 1 aug
Source: Saxo Group

With a Bullish Engulfing candle in July the Monthly chart supports the bottom and reversal scenario currently unfolding. A reversal that could take Nasdaq 100 to 13,650 possibly testing 14K. However, the divergence on RSI has not yet been “traded out i.e. bear trend is still likely to resume after a strong relief rally/Bull trap correction. Divergence on RSI either needs to close below 40 or make a new high to be reset.

Nasdaq 100 m 1 aug
Source: Saxo Group


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