This U.S. equity index is in the middle of a correction after its trend line breakdown.
Will this confluence of resistance levels be enough to keep gains in check?
Here’s where sellers might be looking to hop in.
S&P 500 Index (SPX500): 4-hour
It looks like the tide is turning in favor of stock market bears!
The S&P 500 index recently tumbled below an ascending trend line that’s been holding since October last year, which suggest that a downtrend could follow.
However, technical indicators are still pointing to the presence of bullish vibes, so a pullback might be needed to attract more sellers.As you can see from the 4-hour chart above, the 100 SMA is above the 200 SMA while Stochastic has room to head north before reflecting overbought conditions.
With that, the index could retreat to the former trend line, which happens to coincide with a resistance zone and the 100 SMA dynamic inflection point.
To top it off, a short-term falling trend line connecting the highs since last month might also add another upside barrier around the 4,000-4,050 area of interest.
By the looks of it, jitters about potential bank runs following the SVB collapse still haven’t completely faded. Although Treasury Secretary Yellen reassured that the banking system remains stable and that deposits are safe, investors still seem to be wary of potential liquidity issues down the line.
If this kind of sentiment keeps up, market participants might steer clear of riskier holdings like equities, possibly translating to another week in the red for the stock market.
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