Technical Analysis

Did S&P 500 (ES) Just Double-Top?


In our previous analysis on ES, we noted that the bulls were struggling to push price above the recent high and resistance zone at $5333. Now that a week has passed, the bears have stepped in and there is a red engulfing candle forming on the weekly chart that could close as a evening star pattern.

Weekly Chart

The evening start could lead to a drop in price in the short term. It is difficult to think that we could head lower as this bull market continues to fly no matter what hits the market. At the moment, taking a short around these levels with a stop above the all-time high could be a play, but the problem is there is no real fundamental reason why we would see prices dip further.

There are numerous unbelievable events occurring around the world as we speak, and none of them create bearishness in the market. The fed owns the market and they dictate where prices go so lets trade with them not against them.

Daily Chart

On the daily, the bearish sign is the cross of the MACD/signal but the candle is already getting bid up. This leads us to see this is probably a fake signal and price could rally up and test the zone once more.

Trade Opportunities:

Bearish Scenario:

  • Short Entry: Enter a short position if the price remains below the support level at 5,300.00, confirming the bearish momentum indicated by the MACD crossover.
  • Stop Loss: Place a stop loss above the recent high to protect against a false breakout.

Bullish Scenario:

  • Long Entry: If the price manages to hold above the 5,300.00 level and the MACD starts to show signs of bullish divergence, consider entering a long position.
  • Stop Loss: Place a stop loss just below the recent low to limit potential losses.

Additional Considerations:

  • Volume: Pay attention to the trading volume as a confirmation tool. Higher volume on breakouts (either up or down) can provide additional confirmation of the move.
  • Fundamental Analysis: Keep an eye on any upcoming economic data releases or news that could impact the market sentiment and lead to a breakout or breakdown.