The S&P 500 suffered a violent weekly selloff, plunging over 500 points (-9%) as investor panic erupted following Donald Trump’s announcement of sweeping tariffs on international trade.
While markets had already shown signs of weakness, this geopolitical catalyst triggered a wave of fear, accelerating a breakdown that was technically already in the making.
Technical Breakdown: A Perfect Storm
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Negative divergences on both the RSI and MACD were made near the tops at 6,100. Price made a slightly new high while momentum lagged behind — a classic reversal warning.
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The RSI broke below 50 in February, signalling weakness. And now for the first time since 2022, RSI is in oversold condition.
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Price was trading below the 21 and 34 EMA for weeks already. A near dead cross between the 21 EMA and 34 EMA (red circle) is now forming — the last golden cross in April 2023 preceded a major bull run. This opposite setup hints that more downside risk could be ahead.
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The CBOE VIX surged to 45, and the Fear and Greed Index plummeted to 4 — extreme fear is gripping the markets.
Key Levels to Watch
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Price is testing a long-term rising trendline of the green channel, an important technical support going back to late 2022. A bounce here would be natural, given the steep decline.
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Below current levels, the next zones of interest are around 4,950, 4,800 and deeper at 4,600 — previous areas of consolidation and support.
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Resistance has now flipped to 5,250 and 5,400, which was a key horizontal level before the breakdown.
Bullish Scenario: Oversold Bounce and Trendline Support
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The market is extremely oversold, both technically and emotionally. RSI under 30, panic-level VIX, and extreme fear sentiment often precede short-term rebounds or major reversals.
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A bounce off the rising trendline, combined with buyers stepping in to “buy the fear,” could lead to a recovery back toward 5,250–5,400.
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If the MACD stabilizes and RSI recovers above 30, this could signal that the worst is over — at least for now.
Bearish Scenario: Breakdown and Deeper Correction
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If the rising trendline fails and the EMAs confirm a dead cross, the technical damage could worsen.
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A failure to reclaim 5,250 would reinforce bearish momentum and open the door toward 4,800 or even 4,600, levels that align with earlier consolidation zones.
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In this scenario, traders will likely continue pricing in a deep economic slowdown or recession driven by protectionist trade policy.
Conclusion: Panic Selling or Structural Breakdown?
The technicals have clearly turned bearish, with a looming dead cross and an RSI crash confirming a trend reversal. However, panic and extreme fear often precede turning points, and the market is now testing a critical rising support line.
Whether this is a buy-the-fear moment or the start of a deeper recessionary bear market depends on what happens next around this level. All eyes will be on the trendline, sentiment, and macro headlines in the coming days.
Is this the moment to panic, or to be greedy when others are fearful?
