Bottom line: SPX500 long term structure continues to remain bearish against 3600 resistance. The indice has dropped to 3230 levels for now and trades extremely close to immediate support around 3200 mark. Bears might be poised to stay in control from here.

 Fundamental Outlook:

NZDUSD has been dropping since printing highs around 0.6800 on September 18, 2020. The exchange rate has erased over 275 pips and is trading around 0.6530 mark as we prepare to publish. If risk aversion continues further, the exchange rate might continue to remain under pressure.

USDJPY has bounced back after printing 104.00 lows early this week. The exchange rate has gained over 140 pips and is trading close to 105.40/45 mark as we prepare to publish. The safe haven US Dollar and anti-risk Japanese Yen have remained beneficiaries as global markets and risk assets continue to drop. The exchange rate might gain over the next several weeks.

SPX500 continued its drop further closing around 3242, down by -2.14% yesterday. The indice futures trade lower today around 3229 as we prepare to publish. Dow Jones was down -1.81%, while NASDAQ had collapsed close to -3.00% as risk aversion continues. Investors might remain cautious over the next several weeks as the safe haven US Dollar might continue its gains.

Technical Analysis:

SPX500 continues to remain in control of bears since printing highs just below 3600 handle. The indice has dropped through 3230 levels (futures) and bears might be inclined to break below 3200 support in the near term. Intraday rallies might remain well capped below 3600 mark going forward.

SPX500 had terminated a complex correction around 2190 levels in March 2020. Since then, the indice had managed to produce an impressive rally towards 3600 levels before hitting resistance. High probability remains that a major top is in place around 3600 handle.

Also note that SPX500 has broken below its trend line support connecting March 2020 lows. The above confirms that the long term trend might have turned bearish and that the indice might remain vulnerable for a continued drop towards 2190 lows as well.

Most traders might be inclined to hold on to short positions taken earlier around 3550 resistance zone and also look to add further towards 3450 mark, with protective stops above 3600 and projected targets towards 2190 mark, going forward.

Prepared by

Harsh Japee, Technical Analyst.

SPX500 Chart

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