Macro: Sandcastle economics
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Technical Update - SP 500 and Nasdaq 100 rejected at key resistance. Downtrend likely to resume
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: S&P 500 / US500 cfd and Nasdaq100 / USNAS100 cfd have been rejected at key resistance levels. RSI indicator also rejected at key threshold indicating bearish trend likely to resume
S&P 500 The Bear Engulfing top and reversal candle is still in play. S&P 500 needs to close above its peak to cancel it.
For that scenario to play out it requires for S&P to close above resistance at 4,540 in the first place, and that seems to be a bit of a struggle.
A close above 4,540 is likely to also take out the Bear Engulfing peak at 4,607
The Index rejection at the 4,540 resitance ant the RSI rejection at the 60 threshold are signs of weakness i.e., sentiment is negative.
RSI is testing its lower rising trendline and a close below is likely to send it back below 40 threshold thus further underlining the negative outlook.
Key support on the S&P 500 at 4,340 could thereby be tested.
US500 cfd: Rejected at 4,540. US500 currently back below 55 Moving Average.
RSI is still showing negative sentiment and needs to close above 60 to change that.
US 500 seems set for a bearish move to test the key support at around 4,334. A close above 4,540 will reverse the picture to bullish
Nasdaq 100 As mentioned in previous update “Bears can still hang their hat on the fact that RSI is still showing negative sentiment and needs to close above 60 to change that” RSI got rejected at 60 threshold and closed yesterday below its rising trendline.
Nasdaq 100 could slide lower to test the key support at around 14,687.To reverse the bearish scenario an Index close above 15,651 and an RSI close above 60 are needed.
If that plays out July peak at around 15,932 is likely to be taken out
USNAS100 cfd. The Evening Doji top and reversal pattern is still valid. USNAS100 has been rejected at 15,525 and RSI got rejected at 60 i.e., still in bearish sentiment. A bearish move to test the key support at around 14,687 is in the cards.
A close below there is downside potential to 13,568 but with strong support at around 14,250.
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