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DailyFX Home / Analyst Picks / Pair to Range Trade

Time to Get Long Risk Again?

By , Sr. Currency Strategist
06 February 2014 17:15 GMT

Talking Points

  • SPX rebounds from key technical support level
  • Next few days look critical for the index from a cyclical perspective

Unfamiliar with Gann Square Root Relationships? Learn more about them here.

The next few days look critical for the S&P 500. The index peaked out at the start of the two-week cyclical turn window we highlighted between the end of January and the start of this month. The short-term trend has most definitely turned down with the SPX having come under steady pressure since about January 23rd. With this important turn window coming to a close at the end of the week we are now on the lookout for a potential low and there is some chance that yesterday’s reversal from 1737 may have been it. If the index is indeed recording an important bottom around this time then price should not exceed this week’s low (whatever it may be) next week on a daily close basis. Strength back over 1795 will confirm a reversal. Should the index continue to weaken into next week then it will confirm a more powerful change in trend has occurred over the past few weeks and setup further weakness over the next few months.

S&P 500 Daily Chart: February 6, 2014

Range_FEB_6_body_Picture_2.png, Time to Get Long Risk Again?

Charts Created using Marketscope – Prepared by Kristian Kerr

Key Event Risks in Coming Sessions:

Range_FEB_6_body_Picture_1.png, Time to Get Long Risk Again?

LEVELS TO WATCH

Resistance: 1780 (Fibonacci), 1795 (Fibonacci)

Support: 1749 (Gann), 1737 (Fibonacci)

Strategy: Buy SPX on weakness

Entry: Buy SPX at 1749

Stop: 1-day close below 1737

Target: 1795

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

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To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter at@KKerrFX.

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06 February 2014 17:15 GMT