The S&P 500 received a notable boost from the Jackson Hole Economic Symposium, sending the index to a fresh all-time trading high, around the 4,550 level as expectations that the United States FED while continuing purchase massive amount of US stocks and driving the S&P 500 higher.
Technical traders’ next big target is almost certainly going to be the 100% Fibonacci extension level of January 2020 to the 2020 COVID-19 inspired spike low, around the 4,609 level.
indeed it is a target that looks increasingly achievable as the S&P 500 looks increasingly comfortable above the 4,500 level. With the fundamental backdrop improving due to the Jackson Hole stimulus pledge in the United States the chances of further upside in the S&P 500 are very high.
Fund flows are likely coming into the S&P 500 in September, which could cause an even greater rise. Whether some funds are going to be taking profits when the mentioned Fib target is hit remains to be seen.
It should be noted that the 5,370 level is the next big Fibonacci target, which represents the 1.61 Fibonacci extensions of January 2020 high to low sequence mentioned earlier.
Something else to consider is market sentiment. The ActivTrader sentiment platform shows that nearly 86 percent of traders are bearish towards this market. I believe this is a positive, because the sentiment dynamic is too one-sided, and a short squeeze is likely underway.
S&P 500 Short-Term Technical Analysis
The four-hour time frame shows that a large, inverted head and shoulders pattern remains in play while the index trades above the 4,480 level. The overall size of the pattern implies more gains towards the 4,600 level.
Any pullbacks towards neckline support, around the 4,500 level would be a solid area to look to enter into the prevailing bullish trend. I like the chances of the pattern reaching its full projection due to the fact that that 4,609 is a long-term Fib target.
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S&P 500 Medium-Term Technical Analysis
Looking at the daily time chart, the central focus remains a massive bullish reversal pattern which is in control in play, and of course the 100% Fibonacci target.
The overall size of the inverted head and shoulders pattern suggests that a blockbuster rally towards the 4,700-resistance level should be expected over the medium to long-term, while the 100% Fib level sits at 4,616.
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