S&P 500 technical forecast: SPX rally faces first major test

S&P 500 technical forecast: SPX weekly trade levels

• S&P 500 set to snap three-week advance off key support at the yearly open
• SPX500 rally vulnerable below 2023 opening-range high- constructive above 3844
• SPX resistance 4134/37 (key), 4312, 4415– support ~3972, 3844, 3760 (critical)

The S&P 500 is poised to snap a three-week rally with SPX500 responding to technical resistance this week. While the medium-term outlook remains constructive, the advance may be vulnerable here as the bulls test the yearly opening-range highs. These are the updated targets and invalidation levels that matter on the SPX500 weekly technical chart this month.

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S&P 500 Price Chart – SPX Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; SPX500 on TradingView

Technical Outlook: In my February S&P 500 technical forecast we noted that the, “sell-off is approaching key support levels into the March open. From at trading standpoint, look to reduce short-exposure / lower protective stops on a drop towards the yearly open.” The index briefly registered an intraday low at 3807 but failed to mark a daily close below 3844. A three-week rally off that mark has extended more than 8.8% off the lows with the SPX500 now testing resistance at the yearly high-week close / March 2022 swing low at 4134/37- looking for a reaction off this pivot zone.

Initial weekly support rests with the 52-week moving average (currently ~3972) backed by the objective yearly open at 3844 and the 61.8% Fibonacci retracement / December low at 3760/63- a break / weekly close below this threshold is needed to mark resumption of the broader downtrend towards the 2021 lows at 3664 and beyond.

A topside breach / close above the yearly opening-range highs at 4196 is needed to validate a larger breakout towards uptrend resistance at the 61.8% retracement of the 2022 range (4312) and the 100% extension of the October rally at 4415- both levels of interest for possible topside exhaustion IF reached.

Bottom line: The S&P 500 has rallied back into resistance near the yearly range-highs- risk for possible exhaustion / price inflection early in the month. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops – losses should be limited to the yearly moving average IF price is heading higher on this stretch. Ultimately a close below 3760 would be terminal with such a scenario threatening another accelerated decline towards fresh yearly lows.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on Twitter @MBForex