S&P 500 daily chart, triangle forming

S&P 500 Technical Analysis: Wedge Formation Nearing Completion

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S&P 500 Highlights:

  • S&P 500 testing top-side trend-line of wedge
  • Top and drop, or consolidation pattern?

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The debate continues - is the market topping or consolidating? It could be either, but the broad wedge formation under development could soon give us a definitive answer. The most recent drive off the February 2016 trend-line and 200-day MA has the top-side trend-line of the triangle in play.

We're at a fairly important juncture here in the short-term and possibly big-picture, too. In the short-run, the market runs the risk of another turn lower, but a downturn might not last long as the 2016 trend-line/200-day MA (in confluence) are rising levels of support. The bottom of the triangle lies just below this confluence of support, so even on a slight breakdown there is another line which could keep the market held up.

In either event - whether we see a breakdown confirming a top, or a consolidation pattern leading to higher prices - a little more time for the pattern to tighten up the pattern is ideal. The size of the pattern points to a sizable move of over 300 points from the point of a breakout. A downside break will hold the most violent move.

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S&P 500 Daily Chart (Triangle forming)

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---Written by Paul Robinson, Market Analyst

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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