S&P 500 Nears Critical Breakout: Key Supports in Focus

Today, the technical focus is on the S&P 500, which had a promising start to the week. Optimism is evident, but the key question is whether this positive sentiment will carry through as we approach critical data releases. The most influential event for the index will be tomorrow’s U.S. inflation report, which is expected to generate a strong reaction in the S&P 500.

From a technical perspective, the price has been moving sideways but remains near the local high. The index is currently trading inside a pennant formation, as marked by the green lines. This pattern typically indicates consolidation before a potential breakout. Supporting the price action are two key support levels: the black horizontal support and the blue uptrend line.

Trading Strategy:

• Bullish Scenario: A price breakout above the upper line of the pennant would serve as a strong buy signal. This would suggest that the S&P 500 is ready to continue its upward momentum.
• Bearish Scenario: On the other hand, if the price breaks below the three key support levels—the lower line of the pennant, the black horizontal support, and the blue uptrend line—this would be a solid signal to go short, suggesting a potential bearish reversal.

With the U.S. inflation data set to play a crucial role tomorrow, traders should keep a close eye on how the market responds to these support and resistance levels.

Source: https://www.axiory.com/analytics/technical-analysis/s-p-500-nears-critical-breakout-key-supports-in-fo