SPX500USD The Index is approaching a critical technical juncture as a bearish Alt-Bat harmonic pattern* completes on the 4-hour chart. This formation, finalized at the 113% Fibonacci extension level at $5,924, signals a potential shift in market sentiment after a sustained period of upward momentum. Price action recently touched a new high at $5,924, with immediate fractal resistance forming just above at $5,927.
Despite this bullish extension, momentum indicators are flashing warnings. Both RSI and MACD are showing clear signs of bearish divergence, indicating that upward strength may be waning. When momentum weakens while prices continue rising, it often suggests that the underlying trend is becoming unstable.
A decisive break below $5,849 would likely confirm the pattern’s bearish implications and open the door to a corrective move. In that scenario, we will be watching for potential support near $5,579, a previously tested level. If selling pressure continues, the next downside target could be around $5,500, aligning with the 38.2% Fibonacci retracement level and the projected Alt-Bat target zone.
*This setup doesn't guarantee a reversal, but it significantly raises the probability of a pullback in the short term. Price confirmation below key levels will be essential to validate the pattern and assess the strength of any emerging downtrend.
Happy Trading,
André Cardoso
Harmonic Patterns | Market Analyst | Forex Analytix | Porto, Portugal
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Harmonic Patterns | Market Analyst | Forex Analytix | Porto, Portugal
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.