{"id":5821,"date":"2024-09-18T10:26:43","date_gmt":"2024-09-18T10:26:43","guid":{"rendered":"https:\/\/alchemymarkets.com\/?post_type=market_insights&p=5821"},"modified":"2025-05-14T09:06:45","modified_gmt":"2025-05-14T09:06:45","slug":"sp500-bull-trap-sep-2024","status":"publish","type":"market_insights","link":"https:\/\/alchemymarkets.com\/it\/education\/market-insights\/chart-of-the-day\/sp500-bull-trap-sep-2024\/","title":{"rendered":"Is it a Bull Trap: S&P 500 Retesting All-Time Highs"},"content":{"rendered":"\n

As we reapproach the all-time highs on S&P 500, the idea of a Fed Pivot is looming over each and every traders\u2019 head. <\/p>\n\n\n\n

Is this potentially a setup for the big players to massively short-sell, catching the overly bullish retail traders with their pants down?<\/p>\n\n\n

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Source: Elliott Wave International<\/figcaption><\/figure>\n<\/div>\n\n\n

With the interest rate announcement coming up today, the markets are expecting a cut between 25bps \u2013 50bps.<\/p>\n\n\n\n

Whilst this is inherently bearish for the U.S Dollar, and should by right lift up the price of assets weighed against it, like the S&P \u2013 the rate cut is also a response to recession. Given the Fed Pivot\u2019s infamous history of leading to a price drop days or weeks after the decision, we should proceed with caution here.<\/p>\n\n\n\n

Weekly Chart of S&P 500<\/h2>\n\n\n\n

The weekly chart of S&P 500 paints a picture of a broadening wedge towards the upside, with the trendline projecting a $6,000 price target by the end of October. <\/p>\n\n\n\n

Furthermore, a bearish weekly RSI divergence paints a picture of a reversal to come. When you pair these signs with the knowledge of how Fed Pivots tend to play out, the current price action of S&P 500 is potentially a warning for a BULL TRAP!<\/em><\/strong><\/p>\n\n\n\n

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That being said, the asset is still technically in an uptrend, and has recently seen an amazing recovery from approximately $5,400, reached two weeks ago. <\/p>\n\n\n\n

Currently, it is struggling with a resistance zone formed by its All-Time High at approximately $5,671.17 and also formed by a hanging man candlestick pattern<\/a> (Bearish reversal signal).<\/p>\n\n\n\n

However, if the price of S&P 500 does push higher, we\u2019d have to worry about the weekly bearish divergence becoming more prominent.<\/p>\n\n\n\n

Hourly Chart of S&P 500<\/h2>\n\n\n\n

Currently on the 1-hour timeframe, the S&P 500 is grinding on the EMA 20, which is currently above the EMA 50.<\/p>\n\n\n\n

Whenever these conditions are met, the S&P 500 has been able to stay above the EMA 20, until eventually it breaks the EMA50 and begins a small descent. <\/p>\n\n\n\n

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Since these are our current market conditions, we could watch a potential similar scenario to occur.  In such a scenario, the S&P 500 could reach the following levels:<\/p>\n\n\n\n