Featured Trade SP 500 is shaping a potential minor mean reversion rebound
A potential minor mean reversion rebound looms for the S&P 500
Share this:
Short-term technical outlook on S&P 500 (Tues, 31 Jul)
Key technical elements
- The recent slide seen on the SP 500 Index (proxy for the S&P 500 futures) from its 2848 high of 25 Jul 2018, U.S. session is now coming close to an intermediate support of 2790 (the former swing high areas of 27 Feb, 13 Mar & 13 Jun 2018) (see 4 hour chart).
- In conjunction with Elliot Wave/fractal analysis, the aforementioned slide from 2848 high has traced out a complete set of 5 waves which may indicate the end of a minor degree bearish impulsive wave 1 with a typical 5th wave end target at 2796 (based on 0.618 Fibonacci projection, 2 points below yesterday low of 2798). Thereafter, the Index is likely to shape a minor mean reversion rebound to retrace its recent decline.
- The 4 hour Stochastic oscillator has shaped a bullish divergence signal at its oversold region which indicates that the downside momentum of the recent slide has started to abate.
- The significant short-term resistance zone stands at 2823/28 which is defined by the minor swing high area of 24 Jul 2018, the pull-back resistance of the former minor ascending trendline support from 28 Jun 2018 and the 50%/61.8% Fibonacci retracement of the recent slide from 25 Jul 2018 high to yesterday, 30 Jun 2018 low of 2798.
Key Levels (1 to 3 days)
Intermediate support: 2801
Pivot (key support): 2790
Resistances: 2823 & 2829
Next support: 2740
Conclusion
Therefore as long as the 2790 key short-term pivotal support holds, the Index is likely to shape a minor mean reversion rebound towards the intermediate resistances of 2823 and 2829 before another potential medium-term downleg materialises.
On the other hand, failure to hold at 2790 sees the continuation of the downleg to target the next support at 2740 (the lower limit of the bearish “Ascending Wedge” in place since 03 Apr 2018).
Charts are from City Index Advantage TraderPro
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
S&P 500 forecast: Stocks extend drop as correction risks grow
US and global equity markets have extended Wednesday’s sell-off, with Wall Street opening lower after a weak handover from Asia and Europe. The deterioration in risk appetite has been spreading across global markets. The dollar was firmer, Treasury yields were holding onto yesterday’s gains, while gold, silver and bitcoin were all under pressure alongside equities and major currencies.
ASX 200 Rebound Stalls Despite Wall Street Surge
The ASX 200 rebound is struggling for traction despite a powerful Wall Street rally, leaving 8800 resistance and downside risks in focus.
Nikkei threatens breakout as tech rebound broadens
Breakouts across the SOX and Nasdaq are being matched by rebounds across Asia, with the Nikkei now threatening to join the move.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.