S&P 500 Technical Analysis: Short-term Channel Building
- The S&P 500 loses its ‘excitement’ late-day regarding new UK poll developments
- Eyed support nearly gave way, but holding for now
- Channel building underway, viewing market within its construct
While Europe ended with big gains yesterday, the U.S. markets, which aren’t as impacted by the outcome of ‘Brexit’, only posted modest gains when all said and done. Shortly after the cash open (9:30 EST) the market’s ‘euphoria’ quickly faded as the S&P 500 gave back more than half of its early-day gains.
And just like that the 2083/86 area comes back into focus. The slide late yesterday caused the S&P to breach support briefly to 2080, but overall it was maintained.
A rising channel is developing off the 6/16 low, with yesterday’s peak coming at the upper parallel. The inverse H&S scenario nearly came off our radar, but with the neckline still holding it remains in play. Sort of.
We are more focused on other developments at this time: As it stands the S&P is working on a series of higher lows, higher highs in the short-term (channel building), and as such, our focus is on whether this structure will maintain itself above our noted zone of support in the lower 2080s, or will the lower parallel and support give-way to selling pressure?
For now, we will give the benefit of the doubt to the lower parallel and support, but should it break then we will need to shift our bias lower and return to viewing the low 2080s as resistance once again. Resistance comes in at yesterday's high of 2101, then 2105/08.
Head’s up: Today and tomorrow the Fed’s Yellen will be testifying before Congress at 14:00 GMT time; this could invoke volatility.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.