Bottom line: SPX500 long term structure continues to remain bearish against 3600 mark. The indice has further carved a lower high around 3430 levels. Bears might remain inclined to hold prices below 3430 going forward.

 Fundamental Outlook:

NZDUSD has managed to regain some lost ground and trades around 0.6630/40 levels as we prepare to publish today’s update. The exchange rate had dropped through 0.6500 mark over the last week alongside risk assets and global equity markets. Risk aversion might return soon as investor psychology remains fragile.

USDJPY has managed to push higher towards 105.80 levels this week before finding some selling pressure. The anti-risk Japanese Yen lost some ground since the exchange rate had dropped through 104.00 lows over the last week. GBPJPY has also raised through 136.60 highs after having dropped through 133.00 handle.

SPX500 continued to push higher and managed to tough 3395 highs yesterday. Global indices including Dow Jones (+0.73%) and NASDAQ (+0.33) managed to close higher yesterday. It would be interesting to see how long the optimism continues through risk assets including Gold, Silver and Oil.

Technical Analysis:

SPX500 has managed to produce a counter trend rally towards 3400 mark in the past few trading sessions. The recent rally has been in-line with expectations after the indice dropped from 3588 highs through 3210 levels over the last week. Ideally 3600 resistance should hold going forward.

SPX500 might face strong resistance if bulls managed to push towards 3440/50 zone. It is the fibonacci 0.618 retracement of the entire drop between 3588 through 3210 levels respectively. High probability remains for a bearish bounce, if prices reach there.

SPX500 rally from March 2020 lows around 2200 levels also looks complete at 3588 levels. The above rally being an impulse, the indice should at least produce a corrective drop towards 2800 mark, if not further. Alternately, SPX500 might drop below 2200 if the trend has reversed.

Most traders might remain inclined to initiate fresh short positions around 3430/50 resistance zone, with protective stops above 3600 mark and projected targets below 2200 going forward. Only a break above 3600 would change the above bearish structure.

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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