S&P 500 Index: Chart Analysis After Friday’s Sell-Off

Trading on 12 December was overshadowed by a sharp decline in the S&P 500 (US SPX 500 mini on FXOpen), with the session low approaching December’s previous trough.

Among the key fundamental drivers behind Friday’s drop was the market reaction to Broadcom’s quarterly report. Shares (AVGO) plunged more than 10%, possibly as investors aggressively took profits in tech stocks, concerned that the AI hype may be overheated.

A review of the 4-hour chart of the S&P 500 (US SPX 500 mini on FXOpen) suggests that Friday’s negative sentiment may have begun to ease, as the index is now recovering. Overall, this presents an interesting picture from a price-action perspective.

Technical Analysis of the S&P 500 Chart

Five days ago, we noted that an ascending channel had formed in early December, which could be interpreted as cautious optimism ahead of key news.

However, Fed-related announcements triggered a surge in volatility (as we described, “the calm before the storm”), pushing prices beyond both boundaries of the blue channel:

→ The failure to hold above the upper boundary can be seen as bulls lacking confidence to challenge the all-time high. The false break around 6929 looks like a trader trap.
→ Conversely, bears may have been unable to suppress buying near Friday’s low, as indicated by the long lower wicks on the candles (highlighted by the arrow).

The chart now shows a complex Megaphone pattern (marked A–F).

It is possible that the coming week will be characterised by consolidation following Wednesday–Friday’s swings, with market sentiment increasingly influenced by the approaching holiday period.

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