What’s inside:
- Market gapping sharply higher on subsiding ‘Brexit’ fears
- S&P 500 above critical 2083/86 resistance
- Resistance becomes support, 2105/08 next area of significant resistance
A big bounce in risk on subsiding ‘Brexit’ fears is pushing global markets higher today; the S&P 500 futures are currently indicating a 27 handle gap higher to start the day so far. The result of this push has allowed the S&P 500 to hurdle over the 2083/86 area we’ve had on our radar as major resistance.
From Friday’s commentary regarding the decline from noted resistance in the S&P: “assuming it doesn’t move below around 2064, could be the right shoulder of an inverse H&S formation. Too soon to tell just yet, just a thought. It would fit in nicely with the reversal bar holding and that 2085-ish level sure would make for one grand neckline.”
On Friday, the S&P traded below the 2064 level briefly, but quickly found support at a shade under 2062. This resulted in a right shoulder development, with the subsequent push higher into today leading to a break of the neckline. 2085 had held well as support, then became our spot of resistance following the FOMC announcement (it was broadened to 2083/86, levels aren’t generally exact.) With the S&P currently trading well above the neckline and this key area of former resistance, we will look to it as short-term support.
Given the nature of current market focus on the upcoming ‘Brexit’ vote later this week, it is difficult to make heads or tails beyond a day or so, and as Thursday rolls around the risk of a sharp move will increase to a point where standing aside all together suits just fine on this end.
Short-term support is strong at this time at 2083/86, while the next notable level of solid resistance comes in around 2105/08, with an upper parallel potentially acting as a stopping point prior to reaching horizontal resistance. The measured move target for the inverse H&S formation is ~2115, but we’ll keep 2105/08 as our keyed level of resistance (numerous inflection points, prior neckline).
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