Technical Analyst, Saxo Bank Group
S&P 500 closed yesterday above its short-term falling trendline trying to close above the GAP but failed. However, key resistance for S&P 500 is at around 3,810. S&P must close above that level to gain upside momentum and even if it does 3,907 will be a tough test.
IF S&P 500 slides back and closes below 3,678 followed by a close back below the upper falling trend line selling is likely to accelerate driving the Index to lows around 3,491 possibly lower.
An RSI close below its rising trendline would be a strong indication of this scenario to unfold.
The Russell 2000 Small Cap Index is having strong support at around 1,653. It is the upper level of the Consolidation area going back to 2020. There is RSI divergence on weekly time period suggesting a rebound. A rebound that has started and could take Russell 2000 resistance at around 1,900.
However, for the short-term for the rebound to maintain upside momentum it must close above 1,776. It has broken the falling trend line but 1,776 could prove to be too hard to break.
If Russell 2000 instead slides lower moving back below the falling trend line on daily time period and RSI closes below its lower falling trend line on both daily and weekly, the Small Cap Index could drop to around 1,500-1,467.
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