What does the daily chart say?
Looking at the daily chart, we can say that the current breakdown was one of the biggest in the past months. The same however applies to other major indices. Yet, we can see that the downtrend is not continuing as of now and there was even a slight bounce back up. I still believe that the key level is around 4 605 – 4 647. This level should be a key resistance for S&P 500. If we can break it, we might even see a new ATH. However, if we remain below this level, we are still more likely to continue down.
S&P 500 daily chart, Source: Author´s analysis, tradingview.com
And since we will see a meeting of Fed in March, where interest rates are expected to rise, I do not think we can break this level. On contrary, I believe that S&P 500 will continue downwards.
What about the short term?
The 4h chart also shows several other zones and levels that we need to look for. These are:
- Fibonacci retracement of the whole downward movement at 0.618, which is generally considered to be the strongest of Fib levels.
- Fibonacci extension of ABC uptrend which is at very similar levels with the value of 1.618, usually indicating the last wave and end of the cycle.
- Zone resistance, which is also the strongest at those levels.
S&P 500 4-hour chart, Source: Author´s analysis, tradingview.com
Taking into consideration several factors and indicators, I think that continuation of downtrend is more likely than the uptrend. S&P 500 has a room to grow, but it is very limited due to several important levels, which can be too strong to break for now, leading to downward movement.