Technical Update - S&P 500 and Nasdaq 100 could be hit by a 5% correction Technical Update - S&P 500 and Nasdaq 100 could be hit by a 5% correction Technical Update - S&P 500 and Nasdaq 100 could be hit by a 5% correction

Technical Update - S&P 500 and Nasdaq 100 could be hit by a 5% correction

Equities 3 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  3-5% correction should be expected over the next couple of weeks
S&P 500 top and reversal pattern strongly indicating a correction
Nasdaq 100 likely to break bearish

S&P 500 has formed an Evening Doji Star pattern (circled on the chart) which is a very reliable top and reversal pattern especially combined with other indicators supporting the reversal picture.
In this both RSI and MACD have been showing divergence for a couple of weeks (where instrument is making a new high but indicators are not)

That is a sign of weakness of the trend and an imbalance in the market.
Correction is in the cards where S&P 500 is likely to break below the upper very short-term rising trend line. A close below 4,455 is likely to lead to further selling to test the lower rising trendline.

A close below is likely to lead to further selling towards key support at around 4,328. Whether it will reach that levels is very uncertain.
A close below will demolish the medium-term bullish trend.

For S&P 500 to cancel the top and reversal scenario a close above 4,579 i.e., above the Dojo peak, is needed.

On weekly chart S&P 500 can perform a Shooting Star top and reversal candle if it closes today Friday around 4,508 i.e., approx. same level as the week open.

Source all charts and data: Saxo Group

US500 cfd bouncing somewhat but needs to close above 4,578 to extend uptrend. Strong support around 4,375. RSI divergence strong indicating a correction to be seen. Support at around 4,384

Nasdaq 100 failed to test 16K and now seems to be entering correction mode. Divergence on RSI and MACD have been warning about that scenario was likely to play out.
A close below lower rising trendline is likely to spur a sell-off down to support at around 14,687

If Nasdaq closes below 14,687 a larger correction could unfold. However, there is no RSI divergence on weekly chart suggesting uptrend is likely to pick up again after a correction.

USNAS100 cfd has formed an Evening Doji top and reversal pattern (circled) strongly indicating a correction.
A break below lower rising trendline could lead to a sell-off down to key support at around 14,687.
To resume uptrend USNAS100 would need to close above 15,933


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (
- Full disclaimer (

Boulevard Plaza, Tower 1, 30th floor, office 3002
Downtown, P.O. Box 33641 Dubai, UAE

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.