Head and Shoulders Loom Over S&P 500: Are Indices Set to Drop?

For the past two sessions, both U.S. and European benchmarks have been under pressure, and the charts are now pointing towards a possible deeper correction. On the S&P 500, the structure that has emerged is one of the most recognizable reversal setups in technical analysis: the head and shoulders pattern. It’s highlighted with a green rectangle on the chart, with the head itself standing out in red.

Yesterday’s price action was pivotal. The index broke below the neckline of this formation, marked with the orange line, and that break alone provided traders with a first clear sell signal. But the story doesn’t end there. At the same time, the S&P 500 is now sitting on a much bigger technical level — the black uptrend line that has been supporting the rally since the beginning of September.

This makes today’s trading crucial. If we get a confirmed breakout below that black uptrend line, it would not only validate the head and shoulders setup but also trigger a proper long-term bearish signal. In other words, indices look vulnerable here, and the stage is set for a larger correction if buyers fail to defend this trendline.

Source: https://www.axiory.com/analytics/technical-analysis/head-and-shoulders-loom-over-s-p-500-are-indices-s