In a sign that President Trump is blinking, he said he plans to be “very nice” to China in any talks and that tariffs will drop if the two countries can reach a deal. But from a technical perspective, the S&P 500 Index (SPX) forecast remains rather undecided, explains Fawad Razaqzada, technical analyst at Trading Candles.
Trump added that the final tariffs on China wouldn’t be “anywhere near” the 145% level, implying there will still be tariffs but much lower. He is known for flip-flopping on his rhetoric.
Let’s see if he will pass the vote of confidence with markets. If stocks maintain a positive tone without any major setbacks, then that would suggest investors believe he is getting back on the right track. If volatility remains elevated, then he will have to do a lot more than just make empty promises.
As for SPX, despite a strong recovery in the second week of the month, the index struggled to build on those gains recently. The resulting price action means the bears have been left with little to cheer about for now...while the bulls will need to do more to tip the balance back in their favour.
In other words, we are in no man’s land right now. As such, trading it from level to level continues to make sense.
On the downside, near-term support is now seen around the 5,272-5,296 region. Below that zone, there’s not much further obvious support levels to watch until 5,090 and then 5,000.
As for resistance, 5,385 was the first hurdle on my radar, but it looks like the index has broken this level. It’s the 5,490 to 5,500 zone that really matters. This was a robust support zone before the breakdown earlier this month, and it now stands as a key battleground. A convincing break above here would mark a decisive shift back in favour of the bulls. Until then, any short-term rally may warrant a touch of caution.
