U.S. equities still seem to be in selloff mode, but I’m picking up on this potential correction on the S&P 500 index.
Will any of these levels hold as resistance?
Remember that head and shoulders pattern we were watching on this equity index a few days back?
A neckline break already took place, confirming that a downtrend is in the cards!
If you missed this move, you might still have a chance at catching the selloff since the index is in the middle of a correction.
Wait and see how the S&P 500 reacts to the nearby 38.2% Fib, which is near the 4,000 mark, or the 61.8% level that lines up with the dynamic resistance at the moving averages.
An even larger correction could reach the former neckline support around 4,150-4,200, which might be the line in the sand for a bearish pullback.
This fresh downward SMA crossover means that the odds are in favor of more declines while Stochastic inching close to the overbought area also hints at a likely pickup in bearish pressure.
Risk-off flows have been in play for the first half of the week, as market watchers were focused on the lockdowns in China and resurfacing fears of a global recession.
Expectations of higher interest rates from major central banks might also be enough to keep investors wary of slower economic activity down the line.
Just stay on the lookout for updates that might bring risk appetite back in the game since these could get stock market bulls charging again.
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