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Fan Yang

S&P500 Price Action Suggests More Choppiness Ahead

The S&P500 $SPX broke above a key falling resistance a couple of weeks ago. Since then, price has been consolidating, and we are likely going to see more choppiness and possibly some bearish correction ahead.

S&P500 Daily Chart

(click to enlarge)

Momentum Still Bearish:
- Looking at the daily chart, we can see that even though price broke above a falling resistance, the RSI held under 60. 
- The RSI reflects maintenance of the prevailing bearish momentum. Last time the RSI was held below 60, we saw further correction/consolidation, so it makes sense to expect that again.
- Furthermore, the 5/22 session candle was a bearish engulfing one, adding more bearish pressure on the daily chart.
- I think it would be wise to expect a longer period of consolidation before looking for the bullish continuation.
- If price indeed retreats, the $2677 area would represent a key pivot.
- The 50-day simple moving average and previous resistance pivot is here. 
- A hold above this area would suggests a bullish outlook, and open up the $2800 and the $2880 area. 
- A break below it would open up the $2600 area again, with a more aggressive bearish outlook being $2555 area. 

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