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Technical Update - SP 500 cancelling reversal pattern. Nasdaq 100 likely to follow. New all-time highs in the cards

Equities 3 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank

  • The S&P 500's (and US500) new peak and the outlook on the 0.618 extension at 5,296 highlight its bullish momentum.
  • The Nasdaq 100's ability to hold above 17,808 (17,780 on USNAS100 cfd) and its potential challenge to the 18,417 level are key factors in its next potential moves.

The S&P 500 has invalidated its earlier top and reversal pattern by closing at a new high yesterday. This development followed the index's rebound from its steep rising trend line, with the S&P 500 now mirroring the length of its rise from October 2022 through July 2023, as depicted on the weekly chart.

Yesterday's higher close opens the door to more upside potential, with the next significant level being the 0.618 Fibonacci extension at 5,296, identified as a potential target derived from the "Cup with Handle" pattern.
A daily RSI close above its upper falling trendline would lend additional support to this bullish scenario.

No divergence on the weekly RSI suggests that the index could achieve even higher levels

A close below 5,057 would signal a reversal of the current bullish trend

sp500 d 2103
Source all charts and data: Saxo Group
sp500 w 2103

US500 cfd: At the time of writing the US500 is trading higher testing all-time highs and the RSI is above its falling trendline. If closing above the falling trendline it it will be a strong  indication of higher US500 levels. Key strong support at 5,048.  

us500 d 2103

The Nasdaq 100 Index has tested and maintained the crucial support level of 17,808 on two occasions, a bullish indicator.
Following these tests, the index rebounded, closing back above its rising trendline.

Although the Bearish Engulfing top and reversal pattern remains in play, it may be contested in today's session. A close above 18,417 would invalidate this pattern, setting the stage for the index to target higher levels, potentially reaching 18,812 to 19,048 in the short term.

Despite significant divergence in the RSI (Relative Strength Index), a close above the 60 threshold would bolster the case for further upside.

On the weekly chart, the Nasdaq 100 met resistance at the 0.786 Fibonacci extension at 18,374, but a new high could open the path towards 19,550.

Conversely, a daily close below 17,808 will reverse the bullish trend

nasdaq100 d 2103
nasdaq100 w 2103
usnas100 d 2103

USNAS100 cfd is trading higher pre-market testing all-time highs indicating the top and reversal on the Cash Index Nasdaq 100 is likely to be invalidated
If that scenario plays out there is short-term upside potential to 18,822-19,072

Key strong support at around 17,780. A close below is likely fueling a sell-off


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