Technical Update - Rebound in US Equity Indices could be over
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
Summary: Rebound in US equities could be over after hitting resistance levels. Today's market could be decisive.
US500 CFD/ S&P 500 Index Future got rejected at the 0.618 Fibonacci retracement of the January bear trend forming a Doji yesterday. If we end today’s trading session with a negative (bearish) candle we have a Doji Evening pattern which is a top and reversal pattern indicating the rebound is over and bear trend likely to resume.
Some support at around the 200 SMA and 4,438. However, if market dips below the 200 SMA supports at around 4,262 is back in play.
To reverse the likely reversal picture yesterdays’ high at 4,595 needs to be taken out.
The rebound in USNAS100 CFD/Future retraced approx. 0.50 of the January bear trend and 0.618 of the mid-January – end-January sell off piping above the 200 SMA before sellers came back in regaining control. Price was pushed back below 200 SMA with yesterday’s trading action forming a bearish engulfing candle which indicated a reversal of the rebound.
If selling pressure continues next couple of day’s we are likely to see RSI back below 40 i.e. confirming down trend. 14,452 support could be tested.
For this bearish scenario to be reversed yesterday’s high at 15,277 must be taken out which likely leads a move to 15,500.
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