Huge level in the market is on the verge of a critical test. Bears stomping their feet, eager for revenge and in anticipation of a significant move. At the time of writing, S&P 500 futures are trading -0.6% in Asia, but that is just half the story. There is no news in being told how well the stock markets have performed since recovering from the crisis lows. The S&P 500 has broken above the early March highs where it all began and has made a series of daily closes higher. However, there appears to be some disappointment in the markets pertaining to the federal reserve and prospects of a V-shaped recovery in US and wider global economy. Technically, the chart is turning bearish as price loses momentum at a critical area, having broken said resistance. Well, the old resistance turns support theory is probably about to be put to the test. First, digging deep into the macro, bears don’t have to dig too far to strike gold. US coronavirus case numbers are appalling and highly concerning. Bearish rhetoric from the Fed The Fed explained that the Covid-19 crisis will “weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.” Its economic forecasts were mostly downgraded, GDP for 2020 expected to be between -7.6% and -5.5%. This has may have sent shivers down the spine of the market as investors wake to smell the coffee. Given how much speculation ha been pumped into the price, weak hands may well be very quick to pull the plug, especially those who cannot afford to lose what profits they may have just bagged in one of the most remarkable market events in history, both on the way down and the way up. We have seen what usually takes years to play out in as little as a month, (the 2008 crash took a year and its recovery took a further three years). The stimulus is all price din now, so various headwinds, such as trade wars and tail risks, such as the virus, could well bring this all crashing down and that’s why the following technicals are so important at this juncture. Firstly, for some near term background, take a look at this, while markets were open and post the Fed: The S&P 500 stalls on the intraday charts near the highs following the FOMC shenanigans Daily chart analysis Now let’s look at the daily chart: As we can see, the market is about to test a very important daily candle and the confluence with prior structure looking left on the chart back to the start of march’s price action, where this story all began. A break there will open prospects of a meaning full correction, so best be prepared and pull up the Fibonacci levels: Well, there is a coincidence! The 62.8%, aka, ‘the golden ratio’, lines up perfectly with the next major prior resistance and the crisis bearish gap. 2,950 has now just been earmarked by markets as a key downside target. However, such a correction will have major implications for other asset classes, such as FX. The move could turn the table considerably for such currencies as the euro and Aussie which have had a very positive correlation to equities. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street Expert score 5 Etoro - Best For Beginner & Experts0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 5 Read Review Open My Free Account Your capital is at risk. FXStreet News share Read Next USD/CAD regains 1.3400 amid post-Fed retracement, US Jobless Claims eyed FX Street 1 year Huge level in the market is on the verge of a critical test. Bears stomping their feet, eager for revenge and in anticipation of a significant move. At the time of writing, S&P 500 futures are trading -0.6% in Asia, but that is just half the story. There is no news in being told how well the stock markets have performed since recovering from the crisis lows. The S&P 500 has broken above the early March highs where it all began and has made a series of daily closes higher. 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