S&P 500 Tests Resistance: False Breakout in Play?

In today’s technical analysis, let’s turn our attention to the S&P 500, which is potentially setting up for a bearish move. The index is grappling with horizontal resistance, marked in blue, established by highs on November 11th and retested on November 25th.

Earlier today, during the Asian session, the price briefly broke above this key resistance, creating a bullish breakout scenario. However, the breakout quickly reversed, pulling the price back below the blue resistance. This reversal forms a false bullish breakout, highlighted with an orange rectangle. Such false breakouts often suggest that buying momentum has been exhausted and sellers are regaining control.

Key Levels to Watch

• Bearish Confirmation: For a full bearish signal, we need the price to break below the lower line of the channel-up pattern, represented by the black trendline. A close below this support would open the door for more significant downside pressure.
• Bullish Continuation: On the other hand, a decisive break above the blue horizontal resistance would invalidate the bearish outlook, creating a clear signal to buy and target higher levels.

Outlook

As long as the price remains below the blue resistance, sellers retain hope for a deeper correction. However, buyers could reassert control if they manage to push the price convincingly above the resistance line. Traders should watch the lower black support line for confirmation of any bearish developments.

Source: https://www.axiory.com/analytics/technical-analysis/s-p-500-tests-resistance-false-breakout-in-play