S&P index moving closer to its rising 200 day moving average

As stocks continue to decline, the S&P 500 is approaching a key technical level—the rising 200-day moving average (MA), which currently stands at 5730.78. The index recently hit a low of 5737.41, edging closer to this significant support level. A confirmed break below the 200-day MA could accelerate selling pressure, with traders likely targeting the swing area between 5669.67 and 5688.43 (highlighted in yellow on the chart). This zone has historically acted as a key area of interest, where buyers may look to step in. However, if the downward momentum persists, the next major support level comes in at the 50% retracement of the August 2024 rally at 5633.27, a critical technical threshold that could determine the next directional move for the index.

Meanwhile, the Nasdaq has also come under renewed selling pressure, with the index falling back below its 200-day moving average at 18,393.35. Earlier this week, the Nasdaq reached a low of 17,956.60, hovering just above a crucial retracement level—the 50% Fibonacci retracement of the August 2024 rally at 17,953.44. This level remains a key downside target for traders, as a sustained break below it would strengthen the bearish bias from a technical perspective. If sellers gain control, the risk increases for further downside movement, potentially testing deeper support zones.

The 200-day moving average is often viewed as a long-term trend indicator, and its breach on either index could signal a shift in market sentiment. For the S&P 500, staying above this level would suggest that the longer-term bullish trend remains intact, while a sustained move below it could indicate increased downside risk. Similarly, for the Nasdaq, continued pressure below the 200-day MA and a break of the 50% retracement level would confirm a growing bearish outlook, making lower support levels the next likely targets.

As market volatility remains elevated, traders will closely watch how these key technical levels hold up in the coming sessions. A rebound from support could lead to renewed buying interest, while further declines could intensify the selling momentum, leading to deeper corrections.

This article was written by Greg Michalowski at www.forexlive.com.