Hi Traders! Today I share with you my SP500 technical analysis and short term forecast post, we do our analysis on the MetaTrader4 platform (MT4). Some very interesting, useful tips and hacks about the MT4 platform could be found here. As we do in every technical analysis post we are going to perform the multi-timeframe technical analysis on SP500 in order to find possible trading opportunities. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club Spoiler alert – free memberships are available! Let’s start our analysis now from the highest timeframe which will be the daily chart here.
SP500 D1(Daily) Chart Analysis – Bearish Convergence, Strong Resistance Zone, Parabolic Sar
On the daily chart, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed on 5th November 2021 and the second high that has formed on 4th January 2022 based on the MACD indicator. The price then moved lower and broke below the last low that has formed on 3rd December 2021 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a pullback is happening and also based on the Parabolic Sar we could see that the dots are above the price which we may consider as another evidence of bearish pressure. In addition to this, we had a strong support zone that has formed and the price which was moving lower has broken below this zone and is holding below it. Currently, this strong support zone is acting as a strong resistance zone for us. The price which was moving higher reached this zone, respected it and is bouncing lower from this zone. So everything looks good here for the bears and we may now move down to lower timeframe and look for evidences supporting this short term bearish view.
SP500 H4(4 Hours) Chart Analysis – Bearish Convergence, Strong Resistance Zone
On the H4 chart, the price which was moving higher has created a bearish divergence between the first high that has formed on 2nd February 2022 and the second high that has formed on 9th February 2022 based on the MACD indicator. The price then moved lower and broke below the last low that has formed on 4th February 2022 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a pullback is happening. Until the strong resistance zone (marked in red) shown in the image below holds my short term view remains bearish here and I expect the price to move lower further.
Technical Analysis & Forecast Summary
SP500 D1(Daily) Chart Analysis
- Bearish Convergence, Strong Resistance Zone, Parabolic Sar
SP500 H4(4 Hours) Chart Analysis
- Bearish Convergence, Strong Resistance Zone
Trading Tips
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this short term sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also, don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
