sp 500 pull back before new potential rise 1839612016

Short-term Technical Outlook (Wed, 07 Dec 2016)

(Click to enlarge chart)

What happened earlier/yesterday

As per highlighted in our previous short-term update dated on 02 December 2016, we expect the pull-back seen in the U.S. SP 500 Index (proxy for the S&P 500 futures) to end at or near the 2178 support level before the start of another upleg (click here for a recap).

Indeed, the Index has moved within our expectation and  continued to push higher. In addition, it almost hit its current all-time high of 2214 (printed a high of 2213 in yesterday’s U.S. session).

Key elements

• The current up move from the 2179 low of 05 December 2016 has appeared to be losing upside momentum. The hourly Stochastic oscillator has flashed a bearish divergence signal at its overbought region which highlights the risk of a pull-back in price action.
• From the 2179 low of 05 December 2016, the Index has started to evolve in a short-term bullish ascending channel with its lower boundary (support) now at 2200.
• The aforementioned bullish ascending channel support of 2200 also confluences with the minor swing low area 06 December 2016 and the 38.2% Fibonacci retracement of the recent up move from the 2179 low.
• The upper boundary of the ascending channel stands at 2230 which confluences with the 1.00 Fibonacci projection from 2179 low of 05 December 2016.

Key levels (1 to 3 days)

Intermediate support: 2200

Pivot (key support): 2195 (50% Fibonacci retracement of the up move from 2179 low & congestion)

Resistances: 2230 & 2245

Next support: 2178 (medium-term pivot)

Conclusion

The bullish trend in place since the 2179 low of 05 December 2016 remains intact but the Index may see a pull-back first at this juncture towards 2200 with a maximum limit set at the 2195 short-term pivotal support before another potential upleg materialises to target the next resistance at 2230.

On the other hand, a break below 2195 is likely to put the bulls on hold again to see a further slide to retest the 2178 medium-term pivotal support.

Charts are from City Index Advantage TraderPro

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