S&P 500: It’s Called Resistance for a Reason
Markets

S&P 500: It’s Called Resistance for a Reason

DailyFX.com -

What's inside:

  • 2085 acted as it should, put a lid on the post-FOMC spike
  • Support and resistance levels outlined
  • Could be do for a bounce soon, watching channel development for indications

Following the un-spectacular outcome of the FOMC meeting, the S&P 500 (FXCM: SPX500) quickly edged above the all-important 2085 resistance level before immediately finding sellers. We have been talking about this level for a while now; it was once resistance, then became strong support, but once it broke, given its importance as support, it then became equally significant as resistance. Simple, textbook technical analysis. Yesterday was a good example of how a major news announcement can be used to establish a position if the market moves to your price level.

The fact that the resulting move lower from the day's peak came with quite a bit of power added another layer of confidence. In addition to this being a critical horizontal level, the S&P retested the broken trend-line off the Feb 11 low as well. It just happened to roughly coincide with our noted level of resistance.

In early morning U.S. hours, the S&P moved down into the 2061/57 support area. It's currently experiencing a smallish bounce off this reaction zone, but if no buyers can be found at these levels, then focus shifts towards the 2035/45 zone down to 2025.

The market has been down five days in a row now (so far working on six), and while a streak isn't an overbought/sold indicator itself, it does suggest risk of a rebound, even if small, is quickly growing. A downward channel could be developing, we will be watching how the S&P reacts to the bottom and top-side parallels.

SPX500 2-hr

Check out FXCM's 'Speculative Sentiment Index' to see shifts in trader positioning in real-time.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX , and/or email him directly at probinson@fxcm.com .

original source

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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