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  • The S&P gapped higher on Monday and trades 1.54% higher on the session.
  • The price has broken through an important resistance but will it hold.

S&P 500 4-hour chart

Looking at the S&P 500 chart below its clear to see stocks are moving in the right direction. Risk sentiment has been improving recently despite the growing coronavirus case count in the US. The rise in the PMI numbers out of the US initially boosted the risk sentiment in the markets but traders will need to think about how much stimulus the Fed will continue to add if the numbers keep improving. The markets seem to have become used to the additional liquidity but if there is to be a “v-shape” recovery will the Fed still continue to flood the market with cash.

Looking at the chart, the price has broken through both the red resistance zone and black trendline. The price traditionally moves in waves and now it will be interesting to see if the red line at 3,155.75 holds. Beyond that, if the support level does break the price could move back the trendline again for a retest or even back to fill the price gap at 3,128.25. On the upside, bulls will be looking to target the high on the chart of 3,233.25.

Both of the technical indicators are looking positive. The MACD histogram is green and the signal lines are above the mid-point. The Relative Strength Index is in a positive overbought zone but this could indicate a small pullback is on the cards.

S&P 500 support level

Additional levels