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S&P 500: Short-term Technical Update

S&P 500: Short-term Technical Update

Paul Robinson,

What’s inside:

  • Market volatility remains subdued in light volume period of year
  • Short-term support and resistance levels outlined
  • Keeping trading light until good reason presents itself to trade more aggressively

Yesterday’s price action was subdued, unsurprising for a Monday this time of year. The calendar is light this week, and markets are headed for a choppy week of trading barring any unforeseen catalysts to jostle things up a bit.

The S&P 500 pulled back from a top-side trend-line running off the 7/14 peak, and is currently trying to make its way back higher off the 2174/78 support zone. Can the breakout following Friday’s big NFP print hold, or will it fold, leading to a false breakout? It certainly could and it would be consistent with how markets often act coming out of tight ranges like the one we saw to end July into August. A drop back below 2174 confirms a false breakout and a decline back towards the low-end of the range becomes the risk. Should support hold, then so does the market’s current upward bias.

Short-term levels to focus on: Resistance comes in at 2187, the upper trend-line, then the psychological level of 2200. Support between 2174 and 2178, then the air pocket inside the trading range, with nothing substantial until the 2060/55 band.

Keeping trade size on the light side is a prudent way to approach this tape until we see reason to take on risk; something not likely to happen until we move past the next few weeks into the fall trading season. The S&P 500 Volatility Index (VIX) is hovering around two year lows - volatility is low.

Slow periods of trading are excellent times to review and sharpen your trading skills. Get started here with one of our free trading guides and also check out, “Traits of Successful Traders”.

---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.