The S&P 500 has reversed sharply lower this week, with the index suffering its largest one-day decline since April 21.
S&P 500 analysis shows that the index has failed to overcome its 200-day moving average, and remains technically bearish.
Current technical analysis of the S&P 500 shows that the 2,300 level is a viable bearish target.
S&P 500 medium-term price trend
The S&P 500 is coming under downside pressure as investors fret about a second wave of coronavirus, and the United States economy not being able to fully open.
S&P 500 technical analysis shows that the index could revisit the 2,300 level over the medium-term horizon.
The daily time frame currently shows that two large price gaps were created during the recent rally towards the 2,950 level.
Price gaps often become targets for traders, as historical data indicates that they are very likely to eventually be filled.
Traders should note that the price gaps are currently found at the 2,540 and 2,300 levels.
S&P 500 short-term price trend
S&P 500 technical analysis shows that the index is bearish over the short-term while price trades below the 3,000 level.
The lower time frames currently show that the recent upside rejection from the 2,950 level has created a bearish head-and-shoulders pattern.
Looking more closely, the neckline of the bearish pattern is located around the 2,790. According to the size of the pattern, the index could fall towards the 2,550 level over the short-term.
It is noteworthy that a larger head and shoulders pattern will form if price falls below the 2,720 level.
Overall, watch out for a strong decline in the S&P 500 if the 2,790 support level is broken.
S&P 500 technical summary
S&P 500 analysis indicates that the index could fall towards the 2,500 technical area. A decline below the 2,790 level should be considered extremely bearish.