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Talking Points
- Turns down from key Gann level
- 2040 support zone should prove key
S&P 500 - Failing After Touching Key Symmetry?
The SPX500 (FXCM CFD that tracks the S&P 500) reached a closing high of 2063.9 this week. That is pretty close to my idealized resistance at 2064/2065 which is a convergence of the 6th square root relationship of the year’s low and the 78.6% retracement of the decline from last year’s May high to this year’s February low. There is clearly some risk that the market turns down here. There is also a decent chance in my view that the index may want to test the top of the channel that has influenced trading since November around 2080 before turning down. Let’s see.
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The internal lower parallel of an Andrews pitchfork structure drawn from the January low comes in around 2040 and this looks like a decent downside pivot. If it cracks that then the index might be in a spot of bother. If it can hold above there then there is probably a good chance that we go up to test that channel resistance. The timing at the closing high on Wednesday wasn’t terrible as it was day 48 off the February low and well within the window of 45-50 day “Gann death zone”, but this advance has been pretty remarkable and I really want to see some support levels break before getting too negative on the index.
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--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter @KKerrFX
