S&P 500 Forecast: Index Limps Into the Weekend – DailyForex.com

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Breaking down below the 3900 level opens up even more selling pressure, perhaps all the way down to the 3600 level.

  • The S&P 500 Index was a bit negative during the trading session on Friday as we limped into the weekend.
  • At this point, the market is likely to see a lot of hesitation around the 3900 level, as it is a massive support and a massive resistance level as of late.
  • Ultimately, we need to look at this as a situation where if we break down below that level, then the 50-Day EMA will almost certainly be taken on.
  • Breaking down below that level then opens up even more selling pressure, perhaps all the way down to the 3600 level.

S&P 500 Break Out Scenario

On the other hand, if we break above the 200-Day EMA, which is just above the 4000 level, that gets in this market higher, perhaps looking for a rally to the 4150 level. I think at this point we need to also look at the possibility that the market is going to continue to see magistrates cooperate in order to go higher. After all, the markets have been moving on the hope of a potential pivot by the Federal Reserve, as recent numbers have come in with a little bit less in the way of inflation as we’d seen previously. That being said though, it’s very unlikely that the Federal Reserve is going to change as soon anytime soon, therefore I think you need to look at this through the prism of a potential rollover again. In fact, you could even make a bit of an argument for rising wedge, although it’s a little early to call that.

Either way, I think you are going to see a lot of volatility, which is something that’s nothing new to the stock market as of late. After all, it’s all about the latest narrative, and now Wall Street will try to find a reason to get bullish, although there’s no reason to think that it’s time to be so. Nonetheless, I think what we’ve got is a market that continues to try to “front run the Federal Reserve”, even though the Federal Reserve is nowhere near trying to change things. In this environment, it will continue to be difficult, but ultimately I think we got a situation where the market got ahead of itself yet again, and therefore it’s time to see a bit of a pullback.

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