S&P 500 Shows Indecision Near All-Time High

As the S&P 500 chart (US SPX 500 mini on FXOpen) shows, this morning the price approached yesterday’s high at A, but then sharply reversed downward (indicated by the arrow), forming a lower low at B.

This resembles a Double Top pattern, which can be interpreted as market indecision near the all-time high. Traders are weighing risks and opportunities that depend on US actions in Venezuela:

• Bullish factor: access to the country’s resources could act as a growth driver for the US economy. Yesterday, financials and energy sectors were the strongest performers.
• Bearish factor: related to geopolitical risks and the potential involvement of the US in a protracted conflict.

E-mini S&P 500 Technical Analysis

On 29 December, we noted the indecision of bulls around the 6934 level, as the price showed no signs of firmly holding the record highs. We also considered a scenario in which the S&P 500 (US SPX 500 mini on FXOpen) might decline.

Since then, the trend has largely been bearish, and a descending channel can be drawn, with:

• The median (dashed line) passing through lower highs.
• Yesterday’s move into the upper half of the channel appearing aggressive, given the sharp surge from 6888.

This level may act as support for bulls on their way toward the upper boundary of the channel.

On the other hand, a bearish break of the 6888 level:

• would provide an additional signal of demand indecision;
• would reinforce the descending channel’s relevance as a market reference.