S&P 500 (US 500)
The S&P 500 is reaching a pivotal level. The price is rebounding back towards a confluence of resistance around the 200-day simple moving average (blue line) (200MA).
The move higher has pushed the index into overbought territory. The rebound has occurred on declining volume. These are considered bearish indications in technical analysis terms.
For new short positions traders might want to wait to see a bearish price reversal before reaching the 200MA, accompanied by a move out of overbought territory. In this scenario, 5670 and 5500 would be considered downside support targets from the move, while a close above the reversal high might be used as a stop loss consideration.
Should the price instead break resistance at the 5825 level, traders might instead wait to see how far the rebound takes the price before assessing a new trading opportunity.
Nasdaq100 (US Tech)
The Nasdaq 100 setup is like that of the SP500. The price is rebounding back towards a range of resistance between the 200-day simple moving average (blue line) (200MA) at 20520 and the 20750 level.
The move higher has also pushed the index into overbought territory and occurred on declining volume. These are considered bearish indications in technical analysis terms.
For new short positions, traders might want to wait to see a bearish price reversal before the 20750 level, accompanied by a move out of overbought territory. In this scenario, 19130 becomes the downside support target, while a close above the reversal high might be used as a stop loss consideration.
Should the price instead break resistance at the 20750 level, traders might instead wait to see how far the rebound takes the price before assessing a new trading opportunity.