Technical Analysis Article Iages_1_1024x768M

Technical Update - S&P500 & Nasdaq100. Bottom and reversal pattern indicates short term rebound

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

Summary:  US Equities ended Friday strongly forming a bottom and reversal pattern indicate a nice rebound to expected. Overall trend is still down , however.


Friday S&P 500 reached and tested 3,815 support as mentioned few weeks ago it was likely to do in May. Trading session ended on a strong note forming a Hammer candle (occurs in a down trend where lower shadow – or wick – is 2-3 times the height of the body with no or little upper shadow) which is bottom and reversal indicator. With divergence on RSI a rebound is likely that could take S&P500 towards 4,100 before selling pressure is likely to resume.

SP500 d 23 may
Source: Saxo Group

The overall trend on Weekly and Monthly is still down. 3,815 level is strong support. If a daily close below next strong support is around 3,500.
Weekly RSI is testing lower falling trend line in the falling channel and a short term rebound might not be enough for RSI to test upper falling trend line 

SP500 W 23may
Source: Saxo Group

Nasdaq 100 staying within the steep falling channel. However, divergence on RSI indicates we could see a rebound towards 13K which is the 0.382 Fibonacci retracement of the falling channel. Nasdaq is likely to be rejected at or below 13K and selling pressure to resume.

Nasdaq 100 D 23 May
Source: Saxo Group

On weekly Nasdaq 100 has closed below strong support at around 12,208 bouncing off 0.50 Fibonacci retracement. No strong support before around 11K.

Nasdaq 100 w 23 may
Source: Saxo Group

VIX Index (“Fear Index”) . Despite the bearish moves in Equities VIX is still only slightly elevated showing a slightly rising trend. If VIX closes above 37.50 we are entering big fear levels.

VIX W 23 may
Source: Saxo Group

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