On the daily chart below, we can see that the 4175 key resistance definitely held and the market couldn’t break above it once again. As the price broke below the trendline, the bias switched to the downside and the sellers started to increasingly piling in targeting the support level at 4061.
The last two days of selling were caused by the renewed fears around the banking sector as the First Republic Bank reported a fall of 40% in deposits. Notably, the moving averages have now crossed to the downside in a possible early signal that this may be the beginning of a change in trend.
S&P 500 technical analysis
In the 4 hour chart below, we can see that the price is currently bouncing from the 50% Fibonacci retracement level near the key support level. This is a very important level for the buyers as a break below will most likely confirm the new bearish trend and take us back to the 3840 low. Today we have the US Jobless Claims and the US GDP report. A miss in the data may bring another wave of selling while a beat should offer a bigger correction to the upside.
In the 1 hour chart below, we can see that the last leg down was diverging with the MACD and this is generally a signal of a weakening momentum that is often followed by a pullback or reversal. In this case, we are already seeing the price pulling back and the most likely level of resistance will be the swing high at 4115.
A break above that level should open the door for a bigger correction and possibly another test of the 4175 resistance. The sellers, on the other hand, are likely to lean on that level to position for another selloff.
