Since the beginning of the year, the US Index gained over 3.0%, although last week fell more than 0.8% but remains in a bullish phase since early May.
Last week the index initially fell with a wide range but found enough support near the 23.6 Fibonacci retracement to erase some of its losses and closed in the middle of the weekly range, in addition, managed to close below the previous week low, which suggests bearish momentum.
Stochastic is showing an overbought market although is still displaying a strong bullish momentum.
Seems like the SP 500 index has found strong resistance near 2,803.5 where it failed to breach for a second time and began a downward correction. Now for the million-dollar question, is the US index preparing for a deeper correction or is just taking a breather for the next leg up?
Expecting an upward move to a weekly resistance at 2,803.50 on a bounce from the 23.6 Fibonacci retracement at 2,727.39 (scenario 1) however a break below the 23.6 Fibonacci retracement at 2,727.39 may set in motion a deeper correction down to a weekly support at 2,668.00 (scenario 2).