Bottom line: SPX500 long term structure remains bearish against 3400 resistance. The indice has further carved a lower top around 3230 on June 09, 2020. Ideally, prices should stay below that mark and reverse lower.

Fundamental Outlook:

NZDUSD has rallied since the beginning of this week from close to 0.6400 lows. The exchange rate has risen to 0.6490, almost a 100 pips. NZDUSD has indeed a strong correlation to risk assets and has been taking cues from Global Indices over the week. With a reversal in risk appetite, NZDUSD might come under pressure and break below 0.6400.

USDJPY had hit 108.16 levels before drifting lower again yesterday. The exchange rate is set for volatile movement as NFP is set to release today around 0830 AM EST. The USDJPY might gain further as Unemployment rate is projected at 12.3% versus 13.3%. It would be interesting to see the overall effect, since Japanese Yen is also anti-risk and tends to rise with fading risk appetite.

SPX500 has risen over +3.25% since the beginning of the week, and closed at 3111 yesterday. Futures are trading higher around 3120 as we prepare to publish. A boost in the ISM manufacturing numbers (52.6 against 49.5 projected), might have added to the rally yesterday. With the rising COVID-19 infections and US-China tensions, it might just be a matter of time before risk sentiment gives in.

Technical Analysis:

SPX500 has managed to stage a rally since the beginning of this week. The indice futures are seen to be trading close to 3120 levels and might extend further through 3150/60 levels before reversing lower again. Immediate resistance is seen around 3230, followed by 3400 respectively.

SPX500 had earlier dropped from 3400 through 2200 as an impulse wave. Furthermore, the counter trend rally was a corrective zigzag that terminated around 3230 mark. High probability remains for the indice to push towards 2200 and beyond, while 3230 holds.

Most traders might be willing to initiate fresh short positions from around 3120/60 levels, with protective stop above 3400 and projected targets below 2200 respectively.

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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