Market Context
Following a rebound attempt, the S&P 500 has encountered significant resistance at the 5,555 level—a former support now acting as a barrier. The index has since resumed its downward trajectory, suggesting a potential retest of lower support zones.
Harmonic Pattern Analysis
Technical analysis indicates the formation of a bearish AB=CD harmonic pattern, pointing to a potential support zone between 5,090 and 5,105. This area aligns with the completion point of the pattern, where the length of the CD leg mirrors that of the AB leg, a common characteristic in harmonic structures.
The significance of this zone is further underscored by its proximity to the 0.618 Fibonacci retracement level, a key area often associated with price reversals.
Candlestick Confirmation
For this support zone to hold, traders should look for daily candlestick patterns indicative of a bullish reversal, such as a hammer, bullish engulfing, or morning star. The emergence of such patterns would enhance the credibility of this support level and could signal a potential upward move.
Current Market Snapshot
As of April 21, 2025, the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 index, is trading at $510.34, reflecting a decline of 3.05% from the previous close. The day's trading range spans from a low of $508.51 to a high of $522.45, indicating heightened volatility.
Conclusion
The S&P 500 is approaching a critical support zone between 5,090 and 5,105, as identified by the completion of a bearish AB=CD harmonic pattern. The confirmation of bullish candlestick patterns in this area could suggest a potential reversal. Traders and investors should monitor these technical signals closely to assess the market's next move.
Attached: Daily Chart of S&P 500 Highlighting Harmonic Patterns and Support Zone
For a visual representation of the discussed patterns and support levels, please refer to the attached daily chart of the S&P 500.
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