Introduction
Investors are viewing Trump’s return as very bullish for pro-business policies, fueling the recent rally that we see. It is difficult now to think of something that could send the market lower if the ongoing geopolitical conflicts wouldn’t do it. At the moment, the S&P 500 is up 4% since the election and what was more interesting is that there was very little initial volatility like we saw back in the election vs Hillary Clinton.
Regardless, this chart reveals a powerful breakout from an ascending triangle pattern, and bulls are targeting $6,200. Will the price get there soon?
S&P 500 Technical Analysis
Ascending Triangle Breakout
The daily chart has completed a breakout from a well-defined ascending triangle pattern, which typically signals a continuation of bullish momentum, especially after a retest of the previous resistance of the triangle. If you look at the chart, you can see the breakout occurred back in September, the price stalled for a bit, and the previous resistance was tested around the 5th of November. Now, it has turned into support and has slingshotted after the Trump victory.
Targeting the 6,250 Level
With this breakout, the next price target lies around 6,250, based on the height of the triangle. This target aligns with the positive sentiment in the market, as traders price in the potential economic stimulus and deregulation under Trump’s presidency.
Support from 50-day SMA and Supertrend Indicator
The 50-day Simple Moving Average (SMA), currently around 5,792, is providing solid support in this uptrend. Additionally, the Supertrend Indicator has been bullish (displayed in green) since August. As long as price remains above the 50 SMA, then we can continue to view the market at bullish.
Bullish Case 📈
- Economic Optimism under Trump (BULLISH)🐂: The market’s response to Trump’s presidency is one of optimism, with expectations for policies favoring economic growth and corporate profitability.
- Technical Breakout: (BULLISH)🐂: The breakout from the ascending triangle pattern is a classic bullish signal, reinforced by strong support from the 50-day SMA and the Supertrend indicator.
- Target of 6,250 (BULLISH)🐂: With the breakout confirmed, the measured move suggests that 6,250 is a reasonable upside target in the near to medium term.
Bearish Considerations ⚠️
- Potential for Short-Term Consolidation: Given the recent rapid move, a brief consolidation phase or retest of the breakout level around 5,725 might occur before further gains.
- RSI Moderately Elevated: While the RSI is not extreme, it’s in overbought territory, which could lead to some profit-taking in the short term.
Outlook & Summary
- Short-term (1-2 weeks): Mild consolidation or a retest of the breakout level may occur, but bullish momentum remains strong.
- Medium-term (1-3 months): The target of 6,250 is in sight, driven by optimism and technical breakout confirmation.
- Long-term (3+ months): If economic policies align with market expectations, this bullish momentum could continue, with higher targets achievable.
Final Takeaway
The Trump presidency has injected a fresh wave of optimism into the market, reflected in the breakout of the ascending triangle pattern on the ES futures chart. With a target at 6,250, bulls have a clear path forward, supported by favorable technicals and market sentiment. Staying above the breakout level will be key to sustaining this rally!
