Technical Update - S&P 500 and Nasdaq 100 forming important top and reversal patterns. Key support levels to be observed
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: S&P500 / US500 and Nasdaq 100 / USNAS100 are forming Shoulder-Head-Shoulder top and reversal patterns. Neckline and key support levels need to be broken for confirmation that could send the Indeces 5% lower
S&P 500 seems to be forming a Shoulder-Head-Shoulder which is top and reversal pattern.
The SHS pattern is confirmed if S&P 500 is closing below its Neckline and key support 4,340.
If confirmed there is downside potential to around 4,100 but the potential sell-off could be cut short the 0.618 or 0.786 Fibo level derived from the Head peak to Neckline distance (Vertical dashed line).
The Bearish Engulfing 24th August and the negative sentiment RSI indicate S&P 500 is likely to break below the Neckline thus confirming the SHS pattern.
A close above 4,459 will demolish the SHS pattern.
US500 cfd: Rejected at rising trendline.
Neckline at around 4,433. Potential downside target at 0.618 Fibo and support at 4,169.
Some support at 4,266
To reverse to uptrend at close above 4,473 is needed
Nasdaq 100 is in a downtrend failing to close above 15,366. Key strong support at around 14,687 which is also the Neckline in the Shoulder-Head-Shoulder like pattern.
A close below the Neckline is likely to send the Index down to next support at around 14,254. However, there could be downside potential to around 15,590.
Negative sentiment on RSI and the bearish Engulfing formed on 24th Aug. indicate the Index is likely to break below the 14,687.
USNAS100 cfd. Evening Dojo top and reversal candle pattern. Forming a SHS like pattern.
Neckline and key support at 14,687.
Downside potential to 13,568 but with strong support at around 14,250.