What’s inside:
- Bounce taking out resistance levels
- But still expect the S&P to trade back lower even if just a retest of recent low
- Watching hourly chart for signs of short-term momentum rolling over
The S&P 500 continues to move higher in line with the global bounce in risk. Yesterday, we noted resistance in the 2020 to 2025 vicinity, which did little to slow upward momentum. The next noted level of resistance was around 2040, which also did little to curb the market’s enthusiasm. The 6/16 low at 2050, currently being challenged, comes into view and beyond there we will look to closing daily lows near 2068/70.
The breach below the May swing low undermines the sloppy upward trend structure in place from March to the recent peak prior to ‘Brexit’. This tilts the chart bearish from a trend standpoint. Should a lower high soon develop we will be watchful of how a decline unfolds back towards recent lows for signs of whether it will be a retest or a continuation trade lower to the next noted zone of support in the 1940/50 vicinity.
Even if the rise off yesterday’s low is to fully retrace the Friday/Monday sell-off, it is unlikely to do so without first seeing a decline first.
SPX500 Daily
The hourly chart may help provide some clues as to short-term timing. Sharp hourly reversal bars in the 2050 to 2070 range could be a sign momentum is stalling and ready to push back lower. Should no clear signs of a turnaround appear, then we may be forced to reassess.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX, and/or email him at instructor@dailyfx.com with any questions or comments.
