US indices had a great year. While S&P 500 finished 2018 around 6% lower, the US index is already trading over 28% higher YTD in 2019. Let’s take a look at the index from a technical point of view. Is the upward move set to continue are should we be gearing for a bigger correction?
Taking a look at the index on the weekly frame, one can see that the index plunged after reaching ATH back in September 2018. Bears kept pressuring the index until the last week of 2018 when bulls regained control. Upward move on the index accelerated in January 2019. The index was once again trading at all-time highs by the end of April. The index pulled back later on but has been moving higher since. Over the two previous months, US500 kept reaching new record highs almost every week. Following a break above the line marked by local highs, the upward move accelerated. This line (marked with red colour on the chart) is acting as the nearest support now. The closest resistance level to watch can be found at 3335 pts - the 161.8% exterior retracement of the late-2018 downward correction.
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US500 - weekly interval. Source: xStation5
Moving onto the H4 interval, one cannot see any clear bearish signals on the chart. Nevertheless, in case a correction begins, traders should pay attention to market geometry structure. Local 1:1 structure (yellow box) points to a 3200 pts handle as the nearest support. However, in case the index delivers a bigger correction, the decline could extend to as low as 3155 pts - the lower limit of the wide Overbalance structure (green box). This level is additionally strengthened by previous price reactions. Breaking below this hurdle could hint at a potential trend reversal.
US500 - H4 interval. Source: xStation5
