sp 500 weekly outlook for 15 jun to 19 jun potential corrective rebound before new drop below 210021

(Click to enlarge charts)

What happened last week

The U.S. SP 500 Index (proxy for the S&P 500) has pushed higher but reacted off the pull-back resistance of the “Ascending Wedge” bearish breakout as expected.

Please click on this link to review our previous weekly outlook.

Key elements

• The long-term bullish trend remains intact for the Index as it continues to evolve within a long-term ascending channel (in light blue) in place since 02 October 2011 low (see weekly chart).
• The lower boundary (support) of the long-term ascending channel (in light blue) is now at 2040 (see weekly chart).
• The long-term RSI oscillator still has some room for further downside (as depicted by the green box) before reaching its significant supports (see weekly chart).
• The pull-back resistance of the “Ascending Wedge” bearish breakout is now at 2115 (see daily chart).
• Price action has formed a daily bearish “Shooting Star” candlestick pattern right below the 2115 resistance and 50-day Moving Average (in blue) (see daily chart).
• The intermediate term RSI oscillator remains bearish below its resistances (see daily chart).
• The 2115 resistance also confluences with the 61.8% Fibonacci retracement of the recent down move from 19 May 2015 high to 09 June 2015 low.
• The short-term Stochastic oscillator has just exited from its oversold region which highlights the risk of a short-term rebound in price action of the Index (see 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate resistance: 2100

Pivot (key resistance): 2115

Support: 2071 & 2040

Next resistance: 2140 & 2170/2180

Conclusion

Technical elements suggest that the Index may see a short-term corrective rally above 2083 towards the intermediate resistance at 2100 with a maximum limit set at the 2115 weekly pivotal resistance. Thereafter, a potential down leg is likely to materialise to retest the 09 June 2015 swing low at 2071 before targeting the significant support at 2040.

On the contrary, failure to hold below 2115 is likely to invalidate the bearish tone for a squeeze up towards the next resistance at 2140.

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