S&P 500 - Scores Fresh 2016 Highs, Major Resistance Looms
- New 2016 highs, but…
- Major zone of resistance in the S&P 500 is upon us
- Developing upward sloping channel provides a guide
Yesterday was another strong showing for Wall Street, pushing the S&P 500 (FXCM: SPX500) to new 2016 highs. This brings a major zone of resistance into play between here and 2116. Risk is becoming skewed in favor of seeing a meaningful turn lower develop at some point, but don’t expect it to happen overnight. A process of continued attempts to push higher is more likely than not, as tops tend to be an impressive display of stubbornness by buyers, versus washout lows where after market participants capitulate the market often times turns back higher in violent fashion.
An upward sloping channel is developing, which we will use as our guide for as long as it maintains its shape. The top of the channel coincides with the trend-line off the May 2015 peak and only a few handles above the first horizontal resistance point created back on December 29. This puts us on the lookout for a swing back lower to take hold sometime in the coming days. Again, not looking for a violent move lower, but a tradable one.
S&P 500 Daily: Oct '15 to Present
For the nimble short-term trader, the current ‘seesaw’ environment can make for decent trading as long as you are quick to twist and turn with the market. We’ll delve further into set-ups as they present themselves on the hourly chart in an attempt to catch 1 to 2-day swings.
For insightful medium-term forecasts, check out our free guides.
---Written by Paul Robinson, Market Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.