Analysing the S&P 500's recent volatility and potential bull trap. Our technical analysis covers key support and resistance levels, market breadth, and the impact of ongoing trade tensions.
Let us revisit the technical analysis chart of the S&P 500, a major US benchmark stock index that has witnessed heightened two-way volatile movements in the past two weeks due to trade tariffs woes.
We have previously introduced the S&P in our blog article “A comprehensive guide to the S&P 500 and its CFD trading”
The price actions of the US S&P 500 CFD Index (a proxy of the S&P 500 E-mini futures) have staged the expected bearish breakdown below its 200-day moving average, extending a decline of 21% from its current all-time high of 6,153 on 19 March to print a recent low of 4,812 on 7 April.
On Wednesday, 9 April, US President Trump announced a 90-day pause on the higher reciprocal tariff rates for countries that do not retaliate, except for China, where duties on Chinese imports were raised to 145%.
The U.S. stock market soared, and the S&P 500 posted a monster rally of 9.5%, its best single-day performance since 2008. However, several technical elements have suggested that Wednesday, 9 April’s swift up move may be a bull trap in the making.
Fig 1: US S&P 500 medium-term trend as of 11 Apr 2025 (Source: TradingView)
The daily RSI momentum indicator of the US S&P 500 CFD Index has printed a “lower high” below its 50 level on Thursday, 10 April, in connection with a bearish reaction candlestick seen below its downward sloping 20-day moving average that is acting as a key resistance at 5,545.
In addition, market breadth within the S&P 500 remains weak, offering little evidence of a potential medium-term bullish reversal despite the sharp rally on 9 April. As of Thursday, 10 April, only 10% of S&P 500 component stocks were trading above their respective 20-day moving averages, a continued decline that underscores the lack of broad-based participation in the rebound.
Watch the US S&P 500 CFD Index’s major support at 4,820, and a break with a daily close below it may trigger the start of another potential impulsive down move to expose the next medium-term supports at 4,520, and 4120.
On the other hand, a clearance above the 5,545 key medium-term pivotal resistance negates the bearish tone to see the major resistance coming in at 5,795 (also, the point of intersection between the 50-day and 200-day moving averages).
