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S&P 500 Bounce Appears Corrective So Far, Weakness Favored Ahead

S&P 500 Bounce Appears Corrective So Far, Weakness Favored Ahead

Ilya Spivak, Head Strategist, APAC

THE TAKEAWAYThe S&P 500 bounced aggressively higher but the advance appears corrective in the scope of a larger top in the works, with renewed selling expected ahead.

S&P 500 – Prices bounced from 23.6% Fibonacci retracement support at 1302.90, with the bulls retesting the previously broken rising trend line set from late December as resistance. A break above the January 26 high at 1334.40 is needed to overturn near-term bearish cues.

SP_500_Bounce_Appears_Corrective_So_Far_Weakness_Favored_Ahead_body_Picture_5.png, S&P 500 Bounce Appears Corrective So Far, Weakness Favored Ahead

8hr Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL After a month of standstill, prices appear to have finally made a directional break with a close below support at 97.70, with sellers now aiming to challenge the top of a falling channel set from mid-November now recast as support (95.65). The 97.70 level is now acting as near-term resistance.

SP_500_Bounce_Appears_Corrective_So_Far_Weakness_Favored_Ahead_body_Picture_6.png, S&P 500 Bounce Appears Corrective So Far, Weakness Favored Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices are testing above resistance at 1746.10, with a confirmed break on a daily close above the level exposing 1802.80. However, negative RSI divergence warns that bullish momentum is fading and hints a reversal is ahead. Near-term term support lines up at 1716.17, a previously broken rising channel top.

SP_500_Bounce_Appears_Corrective_So_Far_Weakness_Favored_Ahead_body_Picture_7.png, S&P 500 Bounce Appears Corrective So Far, Weakness Favored Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR Prices have dropped to support at 9684, the 61.8% Fibonacci retracement. This barrier is reinforced by major pivot support at 9679, a barrier that has acted as significant support and resistance since August. Signs of positive RSI divergence on intraday charts (not shown) hint a bounce may be ahead, but confirmation is absent for now. The 50% Fib at 9759 marks initial resistance.

SP_500_Bounce_Appears_Corrective_So_Far_Weakness_Favored_Ahead_body_Picture_8.png, S&P 500 Bounce Appears Corrective So Far, Weakness Favored Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow me on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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