Bottom line: SPX500 long term structure continues to remain bearish until prices stay below 3400 resistance. The indice has managed to reach up to 3388 levels yesterday, just a few points away from all-time highs.

 Fundamental Outlook:

NZDUSD has been under pressure since hitting highs at 0.6715 levels on July 31, 2020. The exchange rate is trading below 0.6600 for now and could continue drifting towards 0.6200/30 at least. The risk associated NZDUSD might take cues from risk assets and global indices over the next few weeks.

Adding further pressure was the Reserve Bank of New Zealand dovish stance yesterday and keeping interest rates low at 0.25%. The RBNZ might be prepared for a negative interest rates policy and more stimulus if required.

SPX500 continues its rally yesterday by +1.40%, managing to close at 3380, just a few points away from all-time highs. The optimism surprisingly continues amidst geopolitical tensions between US-China on the rise. Further, US job markets looking gloomy with no consensus on the new stimulus package yet.

Technical Analysis:

SPX500 bulls continue to defy resistance and continue to probe its all-time highs around 3400 levels. The indice remained just a few points away as it touched 3388 mark before reversing lower again. Believe it or not, even if 3400 breaks, the upside remains extremely limited.

SPX500 had dropped in an impulse wave between 3400 and 2200 in February-March 2020. The impulse wave has been followed by a corrective rally, which has managed to reach 3388 levels. The bearish structure would continue to prevail until prices stay below 3400 mark.

SPX500 support on the daily chart is seen around 3200 levels and it needs to break lower to confirm a meaningful top in place. Alternately, a break above 3400 could test 3430/50 levels before finding resistance again. It might be considered safe to avoid any bull traps, going forward.

Most traders might remain inclined to hold short positions for now, with protective stops above 3400 levels and projected targets below 2200 mark in the next several weeks. Watch out for a break below 3200 to confirm a potential bearish reversal.

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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