June 10 (Reuters) - The S&P 500 is struggling to stay above a critical technical level after last week's sharp selloff resumed on Tuesday.
Traders will be watching closely to see whether it closes above or below that level on Friday, which may determine whether the U.S. benchmark index makes a fresh run toward record highs or deepens its retreat.
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After tumbling more than 3% over three days last week, the S&P 500 gyrated wildly on Tuesday, before closing down 0.26% at 7,386.65, leaving it right around a key weekly Gann Line — currently near 7,385. A Gann Line is a tool that links price movements with the passage of time to identify areas where a market might pause or reverse.
What makes this level particularly significant is its history. The same line spent months acting as a ceiling on the S&P 500, capping rallies on a weekly closing basis since late 2024. That changed in early May, when the index broke above it — a classic technical flip from resistance to support. The precision around the level has been notable: the index tested and held it in mid-May before surging to fresh highs, and a similar pattern has played out again in recent days.
After the latest fall, the risk is clear. A weekly close below the Gann Line, followed by a break of the rising 10-week moving average near 7,300, could open the door to a deeper pullback toward 7,000.
If the weekly close were to hold above the line, the next hurdle would be the four-week moving average, sitting just above 7,460. A weekly close above that level would strengthen the case for a push back toward — and potentially beyond — the record intraday high near 7,620.
Technical analysts use moving averages to strip out price extremes to get a clearer understanding of a market's trend.
What the chart shows:
Gann Line near 7,385 flipped from resistance to support in early May
Index tested and held this level multiple times, including last week and Monday, before falling through on Tuesday, and then rallying back to end essentially right on it
A weekly close above 7,460 targets record highs near 7,620; a break below 7,300 risks a drop to 7,000
(Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they might mean.)
Terence Gabriel is a Reuters market analyst. The views expressed are his own. Editing by Burton Frierson and Nia Williams
