Weekly Technical – S&P500 – June 6th, 2022

The S&P 500 stock index retraced from 14-month highs, adding +6.58% (+256.88 points) to its value in the past week. That was the first weekly candlestick in the green with such a long body since the bullish rally in March 2020. However, the technicals show that the recent rally was nothing but a retracement as significant resistance levels held the index from further recovery.       

The Ichimoku Cloud’s bottom band was a strong obstacle for the bulls last week. Besides, other components of the indicator have already completed the bearish reversal patterns: the leading span is in the red, the price is below the cloud and both Conversion and Base lines are inside the cloud and above the index value. 

If the bulls wanted to keep the recent rally and recover the index value, they have to lift the price inside the cloud, close at least one week above the Conversion line resistance, and keep charting fresh highs. Otherwise, the S&P 500 index will be vulnerable to further sliding towards the horizontal static support level at the recent bottom at 3810.32 points. The ADX and DI indicator, as well as the RSI oscillator point to a bearish continuation rather than a bullish reversal.        

Another weekly chart setup below is even more bearish. The 89-weeks Simple Moving Average did not allow the bulls to get things back to growth. On top of that, we can see here a traditional comeback to previously breached support curve that acted as the resistance last week. The failed test of the resistance might be an attractive opportunity to enter the market with fresh short positions.       

The MACD indicator is in the red, and a potential bullish divergence was not confirmed as the sequence of higher lows was not in play. Besides, both blue and red lines of the indicator have constant descending performance. The Awesome oscillator kept printing fresh lows of the red histogram, which suggests a bearish continuation. Best wishes traders!!