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Technical Update - S&P 500 & Nasdaq unfolding corrective behaviour

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  S&P 500 / US500 cfd and Nasdaq100/USNAS100 cfd are unfolding the correction behaviour following closing below supports
Top and reversal patterns confirmed by Indicators. Further downside should be expected in coming weeks

S&P 500 the Bearish Engulfing top and reversal candle from 27th of July and the RSI and MACD divergence are still in play with the correction currently unfolding after the Index closed below 4,527.

Tuesday the Index bounced off the lower rising trendline and buyers might try to lift the S&P500 back above 4,527.
However, even if they succeed the correction is still in play unless the Index is closing above 4,607

A close below the lower rising trendline is likely to also break below the support at around 4,455, which is likely to lead to a sell-off down to around strong support at around 4,340

sp500 d 0908
Source all charts and data: Saxo Group

US500 cfd correction unfolding with a bearish break of the rising wedge pattern. Dipping down to support at around 4,458 a minor bounce is expected before selling pressure is likely to resturn. A break below 4,458 is likely to lead to a sell off down to support at 4,384

us500 d 0908

Nasdaq 100 has broken below support at around 15,420 confirming short-term down trend. Next support at around 14,750.
A close above 15,932 will extend the uptrend, likely breaking above 16K

nasdaq100 d 0908
USNAS100 cfd Evening Doji top and reversal pattern unfolding with a confirmed short-term downtrend. To cancel the downtrend a close above 15,811 is needed. USNAS100 is hovering around the 15,38 support but a renewed sell-off is likely to push USNAS100 down below 15K.  
Support at around 14,706
usnas100 d 0908

RSI divergence is an imbalance in the market that cannot go on forever and will eventually need to be traded out usually by a correction where RSI is closing below 40 threshold (above 60 if the divergence is bullish), but also sometimes by an even higher (lower) indicator level above previous peak

 

Author is holding a short position in USNAS cfd

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