The S&P 500 continues to hit record highs. Investors should monitor these critical levels

The S&P 500 (SPX) hit a new record high early Monday at the start of a busy week that includes high-stakes trade talks, a Federal Reserve decision on interest rates, and a flurry of earnings reports from big technology companies.

The benchmark index rose on Friday after lower-than-expected September inflation data boosted expectations that the Federal Reserve’s policy committee will cut its benchmark interest rate at the end of its two-day meeting on Wednesday. Progress in US-China trade talks, ahead of a meeting later this week between President Donald Trump and Chinese President Xi Jinping, is boosting sentiment this morning. Meanwhile, investors are bracing for the busiest earnings week of the quarter, highlighted by reports from Meta Platforms (META), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL).

The S&P 500 rose nearly 1% to 6,850 points in the opening minutes of Monday’s session. The index has risen about 40% since hitting its lowest level for the year in early April, and is up 15% since the beginning of the year, buoyed by strong corporate earnings, investor enthusiasm about AI stocks, and expectations of further interest rate cuts by the Federal Reserve.

Below, we take a closer look at the S&P 500 chart and apply technical analysis to identify critical price levels worth paying attention to after the index’s record close.

An upward expanding formation in focus

The S&P 500 has been trading within an extended bull formation since late May, most recently finding support near the pattern’s lower trend line and the 50-day moving average (MA).

Meanwhile, the RSI is confirming the bullish momentum and lies well below previous highs, indicating room for further upside. However, the large-cap index closed just below the upper band of the Bollinger Band on Friday, suggesting that near-term gains may be limited before a possible pullback or consolidation.

Let’s identify a general critical area to watch if the S&P 500 continues its uptrend and also point out three key support levels worth monitoring during potential downturns.

Critical overhead viewing area

An expansionary move above the upper Bollinger band could send the S&P 500 rising towards 7,075, about 4% above Friday’s close.

Investors trading the indicator may look for exit points in this area near the upper trend line of the bullish extension formation, which continues to rise, creating a dynamic resistance level that moves higher over time.

Key support levels are worth monitoring

The first support level to watch is around 6,600. This location on the chart provides the confluence of support from the lower trend line of the bullish extended formation and the upward sloping 50-day moving average.

A breakout from the bullish extended pattern could see the index initially fall towards the 6,500 level. Support may appear in this area, just below the October low and near the upper band of the sideways trend that formed on the chart between mid-August and early September.

Finally, further decline could drag the S&P 500 towards 6,360. The indicator may find support in this area near the trend line connecting a series of corresponding trading activities on the chart from late July to early September.

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As of the date of writing this article, the author does not own any of the securities mentioned above.