Bottom line: SPX500 long term structure continues to remain bearish until prices stay below 3400 mark. The indice might have carved a meaningful lower high around 3230 levels early this month is expected to stay lower.

Fundamental Outlook:

NZDUSD dropped around -1.25% yesterday, closing in at 0.6408 levels. The Reserve Bank of New Zealand kept official cash rate (OCR) unchanged to 0.25%. Further, it has also prepared to provide more stimulus if required and kept doors open for a Negative Interest Policy going forward. The risk associated currency exchange rate might come under renewed selling pressure.

USDJPY managed to recover some of its lost ground as the exchange rate closed above 107.00 mark. The exchange rate could rise towards 108.30/40 levels in the short term. The anti-risk Japanese Yen could gain traction soon as Global Equity Markets selloff yet again.

SPX500 dropped over -2.0% yesterday, closing in at 3061 mark. Investor psychology remains too fragile and risk sentiment reversed sharply as the IMF lowered its growth forecast to -4.9% for 2020. The earlier forecast was -3.0%. Adding further is the fear of a second wave of COVID-19 infections as cases continue to rise in the US and other countries.

Technical Analysis:

SPX500 continues to remain in control of bears against 3230 and 3400 resistance levels. The bearish reversal on June 09, 2020 from 3230 should hold as the indices breaks lower toward 3040 levels as we prepare to publish. A drop below 2936 would confirm that a top is in place at 3230 mark.

SPX500 had earlier dropped from 3400 through 2200 in an impulse wave. The counter trend rally reached just above fibonacci 0.786 retracement of the earlier drop, and managed to reverse from 3230 levels. Bears are looking inclined to produce yet another impulse drop towards 2200 and beyond.

Traders might have initiated fresh short positions around 3230 levels, with protective stops above 3400 and projected targets below 2200 respectively. Only a break above 3400 nullifies the above bearish structure. 

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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