What’s inside:
- U.S. markets tamer than European markets, but still at risk of significant volatility
- Short-term chart ‘shapeshifting’
- Could see one more reliable move before the UK vote
Yesterday, we made mention that U.S. markets aren’t responding to the ‘Brexit’ situation with nearly as much impact as those at the epicenter – UK and Eurozone markets, and that is to be expected. But, regardless, tomorrow’s vote will have a meaningful impact on all financial markets in the very immediate future. This spreads risk across the spectrum, and on that we will reserve our mental and physical capital for any significant trades until after the outcome of the vote.
With that in mind, let’s take a look at the S&P 500 short-term chart: In Monday’s commentary we noted the developing rising channel off the 6/16 low along with its ability to hold onto support in the low 2080s. In overnight trade, the channel structure was broken, but not the trend. (It’s worth noting that just because a trend-line is penetrated, it doesn’t mean the trend has changed.)
The price action since Monday is ‘shapeshifting’; the once rising channel has evolved into a symmetrical triangle above the low 2080s support. Given the S&P’s ability to hold support and converging price action towards the apex of a triangle, the path of least resistance will remain higher on a breakout above the top-side trend-line of the triangle. Should it break to the down-side and clear below 2080, then our focus shifts to the down-side.
Given the proximity of price to the apex, it should break soon, like today soon. So we may see one more ‘reliable’ move before tomorrow’s UK vote and Friday’s outcome. On this end, looking forward to the return to a more "normal" trading environment.
SPX 500 Hourly
Head's up: Yellen will be testifying before Congress again today starting at 14:00 GMT.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
