The S&P 500 Index is in a critical resistance level that has being tested several times in the last year and may determine the future trend of the Index depending on whether it breaks down or bounces back up. The candlestick for the S&P 500 is in resistance level of 1360, a level last tested back in May and July 2011 and March of this year.
Mounting to the importance of the current situation is a set of contradictory technical indications we are receiving. In a positive note a clear double-bottom formation is in place, meaning the current bounce back may be strong and a continuation may be expected. For this to happen, the Index should go and break up its previous peak level of 1392 - under such perspective we may be considering that the upper trend shown for the first quarter of the year may continue.
In the other hand, a troubling set of technical components make as believe that the selling pressure is gaining momentum with the main Moving Averages (for the 10, 20, 40 and 50 periods) converging down and the RSI and MACD indicating the Index is more likely to move down than bounce back up and retake its winning strike. RSI is in a level below the 50 mark and MACD is trending down in line with the underlying Index - All again indications of exhaustion and selling pressure for the S&P 500.
For the future, we could feel confident from a technical perspective on a continuation of the early winning race if this double bottom formation gets consistent and breaks the previous peak or if the S&P 500 keeps bouncing up and down for a while around its current resistance level eventually forming a triple bottom pattern, an even better signal for upper continuation.
In the other hand, the Index may break down the 1360 level and continue trending down in a free fall with no meaningful resistance levels to stop it until the 1290 levels, last seen in December 2011 .
Stock chart:
Market Data 
Markets 
AI
