Technical Update -  Top and reversal patterns formed in US stock Indices. Corrections likely unfolding, but how big? Technical Update -  Top and reversal patterns formed in US stock Indices. Corrections likely unfolding, but how big? Technical Update -  Top and reversal patterns formed in US stock Indices. Corrections likely unfolding, but how big?

Technical Update - Top and reversal patterns formed in US stock Indices. Corrections likely unfolding, but how big?

Equities 3 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Friday both S&P 500 and Nasdaq 100 formed Bearish Engulfing top and reversal candles
Dow Jones formed top and reversal end- February
Corrections are likely unfolding .
RSI divergence on both Indices has been warning about stretched bullish trend and looming trend exhaustion

S&P 500 correction likely unfolding key support at around 5,057. A close below could fuel a sell-off down to 4,953.
RSI divergence has been warning about trend exhaustion for some time by now, and now the uptrend seems to have come to an end, at least short-term.  

For S&P 500 to demolish this correction scenario a close above Friday’s peak at 5,190 is necessary
Source all charts and data: Saxo Group

US500 cfd levels: A break below its rising trendline could ignite a sell off down to support at around 4,920

Nasdaq 100 Key support at around 17,808. A daily Close below is likely to fuel a sell-off down to around 17,478 possibly down to 17,128 .
First strong indication of this scenario to play out would be a break below its lower rising trendline in the rising channel pattern

To resume uptrend a close above Friday’s peak at 18,417 is necessary

USNAS100 cfd levels: A break below rising trendline could fuel a sell-off down to 17,870-17,159

A close above Friday peak is needed for uptrend to resume

Dow Jones Industrial DJI formed a Doji Evening top and reversal like pattern end of February (circled)

A break below support at 38,457 is likely to push the Index down to support at 37,778.
A close below 38,109 could push the Index lower towards 37,000

For DJI to indicate the uptrend is resuming a close above 38,971 is needed but for the top and reversal pattern to be demolished and DJI to confirm uptrend ahs resumed a close above 39,283 is a must

US30 cfd levels: key support at 38,450 for a move to 37,777. 
Technical Indicators used in my analysis: Volume. RSI, SMA and Ichimoko Clouds
Technical analysis studies and indicators


The Saxo 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 Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, 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 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 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 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 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 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.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.