I am actually a fundamental analyst by professional. However, due to my curious nature I studied a number of books on technical analysis. Part of the reason is definitely Jack D. Schwager’s immensely popular “Market Wizards” book series. I will of course have a writeup on the best technical analysis books that I read. Meanwhile, here is a small analysis on the S&P 500 using basic common sense.
There is a clear up trend which is still intact
The grey line touching the low points show that the S&P 500 is still in a mid-term uptrend. Since this is not broken we can say that the rally is still intact.
1,850 seems to act as a major resistance
In early January S&P 500 failed to cross the 1,850 level twice. Every time it reached that level there was sell pressure causing it to come down. This in technical term is called a double top (a bearish pattern).
Interestingly, after a strong down move we saw an equally strong recovery and the index is up to its resistance level of 1,850 again. This is a critical moment because if it can break through this barrier with decent volume we can expect it to move up a bit. On the other hand if it fails a third time to break this point then we do have a bit of a problem and we can consider that a triple top (more bearish than double top) has formed.
Ascending triangle pattern has formed
If we combine the up-trend line and the resistance line we see that an ascending triangle pattern has formed which is typically considered bullish. However, we can’t confirm anything until there is a breakout to the top or the bottom.
I would recommend doing a wait and see before taking a position. If the index breaks out to the top then a long position is justified. For people holding a position on the long side already, the daily candle patterns need to be observed closely and if the index starts retracing downwards the position can be closed or reversed (take a short).
Disclosure: I have no exposure on S&P 500 and in fact never traded it in my entire life.