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Charts of the day: potential SPX rebound, Amazon tests multi-year support, bearish divergence in USD/JPY

markets rebound

From the overnight US session, risk appetite somewhat returned, with the broader equity markets rebounding from a fresh one-year low ahead of the Fed’s decision later this week. The S&P 500 bounced off a 12-month low and finished higher, forming a potential morning start in the futures markets reversal pattern, while Amazon managed to climb 2% after a 10% slump on Friday, finding technical support on its multi-year ascending trend line.

Elsewhere in the FX world, a bearish divergence is in play, signalling bullish momentum may be fading in the near term, suggesting a potential pullback could be imminent.

S&P 500 – Daily/4 Hourly chart

A potential rebounding at the key support.

(Click to see the enlarged chart)

Key technical elements:

  • A morning start was formed in the daily chart at the key support of the year-low at 4,056, suggesting the April downtrend may have bottomed out, but further evidence is required to gauge if the rebounding could persist.
  • A bullish divergence stands out in the 4-hourly-chart, indicating the bearish momentum is fading off, paving a way for a further rebounding.
  • The bullish volume picks up in the last six trading days, suggesting dip-buys are merging.

Key price levels:

Supports: 4,056 (the previous day-low, also pivot support to determine if the price could fall into a further downtrend of a bear market)

Resistances: 4,193 (the key intraday resistance, also the Fibonacci retracement of 23.60% connecting from the high on 30 March to the low on 2 May), 4,344 (Fib. 50%), 4,495 (the 200-day moving average that divides the S&P 500 uptrend and downtrend)

Amazon – Daily & Weekly chart

An impulsive rebounding at the multi-year ascending trendline, while the double-top sell-off is still in play.

(Click to see the enlarged chart)

(Click to see the enlarged chart)

Key technical elements:

  • A bullish inverted hammer was formed on the multi-year ascending trendline, suggesting an impulsive rebounding opportunity.
  • In the daily chart, the double-top pattern indicates the downtrend starting from the high on 29 March is still intact.
  • MACD steepens on the downside under the midline, suggesting the bearish momentum stays strong. However, MACD is a lagging indicator that requires more time to confirm a reversal signal.
  • Stochastic points up from the oversold territory, which offers a potential rebounding opportunity.

Key price levels:

Supports: 2,358 (The day-low on 5 May, also the lowest since 27 May 2020)

Resistances: 2,615 (the high on 29 April), 2,720 (the potential neckline price of the double-top pattern, also the level before the gap down)

USD/JPY – 4 Hourly chart

A standout bearish divergence, while the uptrend is still intact.

(Click to see the enlarged chart)

Key technical elements:

  • The uptrend of the price and the downtrend in MACD, Stochastic, and RSI forms a clear bearish divergence, strongly suggesting the upside momentum is fading and a technical correction is required as the pair has been overbought in all the above oscillators.
  • The uptrend is still intact with the price moving between the upper band and lower band of the ascending channel.

Key price levels:

Supports: 129.33 (pivot support that divides uptrend and downtrend), 127.00

Resistances: 131.13

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