Is a Range Forming?The S&P 500 has enjoyed a powerful rally in the last month, and now some traders may anticipate a sideways move.
The first pattern on today’s chart is 5,971, the final weekly close of 2024. The index chopped on either side of that level a few times in January and early February. It stalled there in late February and early March as tariffs were confirmed on Mexico and Canada. SPX peaked just three points below that price on Monday before halting. Is the old resistance still in effect?
Second, SPX made a lower low and a higher high that session. Tuesday was just the opposite. That combination of an outside candle, followed by an inside candle, may suggest a change of direction is coming.
Third, Wilder’s Relative Strength Index (RSI) has turned down after nearing an overbought condition.
If a pullback occurs, traders may eye roughly 5,773 as support. That was the low in January and a high in late March.
Next, prices are historically far above the 50-day simple moving average (SMA). However, the SMA is turning upward. That could suggest the intermediate-term trend has grown more positive, which may keep pullbacks shallow.
Finally, few important events appear to be scheduled before next Wednesday. (Minutes from the last Federal Reserve meeting and Nvidia earnings are both due then.) That lack of catalysts may also create drift – especially with a long holiday weekend approaching.
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