Eyeing the Key 0.618 Fibonacci Level Amid Rising Wedge Breakdown

4 ago

Current Price Action:
- The S&P 500 is currently trading around 5,346.55, having experienced a recent pullback.
- A significant decline of about 13.51% from the recent highs is indicated, bringing the index to around 4,703.08, which aligns with the 0.618 Fibonacci retracement level.

Fibonacci Retracement:
- The 0.618 Fibonacci level at approximately 4,703.08 is a critical area to watch. This level is typically considered a strong support zone in technical analysis, and a bounce from this level could be anticipated if buyers step in.

Rising Wedge Pattern:
- A rising wedge pattern has been identified, which is generally a bearish signal. This pattern suggests that the recent uptrend might be losing momentum and could lead to a significant price correction.
- The break below the lower trendline of the rising wedge confirms the bearish outlook, supporting the expectation that the price might head toward the 0.618 Fibonacci retracement level.

Support and Resistance Levels:
- Immediate support is seen at the 0.5 Fibonacci level around 4,887.58.
- The major support level to watch is the 0.618 Fibonacci retracement at 4,703.08.
- On the resistance side, the recent high near 5,669.34 acts as a critical resistance level. If the index manages to reverse and break above this level, it could invalidate the bearish scenario.

Technical Indicators:
- The moving averages are currently showing a downward slope, indicating bearish momentum.
- The EMA ribbons (colored bands) are compressing, suggesting a potential shift in trend.

Conclusion:
- Given the break of the rising wedge pattern and the target of the 0.618 Fibonacci retracement, the outlook for the S&P 500 appears bearish in the short term.
- Traders should watch for a potential bounce at the 0.618 level around 4,703.08, as it might serve as a strong support area.
- If the index fails to hold this level, further downside towards the 4,440 region could be expected.