Bottom line: SPX500 long term structure continues to remain bearish until prices stay below the 3400 resistance. The indice has managed to reach up to 3330 levels (spot) yesterday, before pulling back. Bears are poised to come back strong from here.

Fundamental Outlook:

NZDUSD had peaked at 0.6715 mark on July 31, 2020 before reversing. The exchange rate is currently seen around 0.6650 mark and is expected to drop further as NZDUSD faces renewed selling pressure over rising US-China rift. Risk appetite might swiftly reverse, dragging NZDUSD down as well.

SPX500 continued its rally and managed to close higher by +0.64%, around 3327. Dow Jones had also rallied over +1.39% closing around 27200 mark. The optimism over stimulus hopes has added to the above rally but this might reverse as US-China tensions continue to escalate further. In the latest, the US Secretary has urged Google and Apple to remove Chinese Apps from their app stores.

USDJPY had managed to rally through 106.50 levels over the last week. The exchange rate is trading lower towards 105.40 mark as we prepare to publish today’s update and set to rise further as US Dollar might gain over the next several weeks. The decision on extending USD 600 per week unemployment benefit is still pending.

Technical Analysis:

SPX500 has managed to print yet another lower high around 3330 (spot) yesterday, taking most traders by surprise. Believe it or not, the structure remains bearish as long as the indice trades below 3400 resistance. A break below 3280 interim support, would be encouraging to bears.

SPX500 had earlier dropped from 3400 through 2200 unfolding into an impulse wave. The rally post 2200 still falls as a corrective wave as prices hold below 3400. It has pushed much deeper than expected but structure still remains constructive for a bearish reversal ahead.

Most traders might still initiate fresh short positions around current levels (3327) with protective stops just above 3400 mark and projected targets towards sub 2700 and 2200 respectively. A break below 3280 and subsequently 3200 support would confirm a meaningful top.

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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