The S&P500 Technical Forecast, what is Moving Markets in the Week Ahead?

By: Miguel A. Rodriguez

09:21, 26 October 2020

Market’s week ahead Overview, Key data releases, and S&P500 technical analysis.

Key Data Releases in the Week ahead

On Monday, October 26, markets follow the German IFO business climate index of October with the US Chicago national activity index of September and the SNB chair Jordan’s speech.

On Tuesday, October 27, investors will find out about the US durable goods orders of September and the CB consumer confidence of October.

On Wednesday, October 28, markets expect the Australian inflation rate in Q3, the US trade balance of September number, Bank of Canada rate decision, and the change in the US oil stockpiles.   

On Thursday, October 29, investors will follow the bank of Japan interest rate decision, the German unemployment rates of October, the Eurozone consumer confidence index of October, the US GDP Q3 read with the initial unemployment claims. On the same day, traders will find out about the ECB rate decision then they will follow the ECB president Lagarde’s press conference.

On Friday, October 30, markets check the Japanese unemployment rate of September, the German GDP of Q3 with the Eurozone inflation numbers of October. Additionally, markets expect the Canadian GDP number of August and the US PCE index numbers of September with the Michigan consumer sentiment index of October. 

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S&P 500- Daily Price Chart (April 8 – October 25, 2020)

On October 12, the S&P500 coiled for a possible downside move. The price developed a double top pattern where the neckline resides at 3197.7. A break below this level could send the price even lower towards 2790.3 in the short to mid-term.

A daily close below the low end of the current 3587.4 - 3346.9 trading zone could encourage bears to press towards the aforementioned neckline at 3197.7 (the September 24 low).

On the other hand, a daily close above the high end of the zone at 3587.5 could send the price to a new all-time high and push towards a new psychological level of 3700.0.

 S&P 500- Four Hour Price Chart (September 23 – October 25, 2020)

On October 14, the S&P 500 corrected lower and created a lower high at 3523.5. The price started then a downward trend creating lower highs with lower lows. On October 21, the index provided another bearish signal as traded below the bullish trendline support originating from the September 24 low at 3197.8.

In conclusion, while the bearish bias is still in place a break above the aforementioned trendline indicates a weaker downside momentum. Thus, a break above 3480.5 may trigger a rally towards the high end of the current trading zone discussed above on the daily chart, while a break below 3295.5 could send the price even lower towards 3197.7. As such, the support and resistance levels underlined on the chart should be kept in focus.

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