sp 500 weekly outlook for 17 aug to 21 aug 2098 is now the potential upside trigger level 1054402015

(Click to enlarge charts)

What happened last week

The U.S. SP 500 Index (proxy for the S&P 500) has whipsawed around the 2070 weekly pivotal support before staging a recovery in the later part of the week.

Please click on this link for more details on our previous weekly outlook.

Key elements

• The Index has continued to evolve within a 5-month sideways range configuration in place since late February 2015. The range top stands at 2128/2138 with the range support at 2050/2040 (see daily chart).
• The long-term bullish trend since 02 October 2011 low remains intact as the Index continues to hold above the lower boundary (support) of the ascending channel (in light blue) and 55-week Moving Average (in blue) which both confluences at the 2040 level (see weekly chart).
• The impending bullish continuation chart pattern called “Cup With Handle” (as depicted by the yellow shaded box) remains intact with its neckline resistance at 2128/2138 (see daily chart).
• The exit potential of the “Cup With Handle” chart pattern stands at 2216 which also confluences with the 1.618 Fibonacci projection from 08 July 2015 low@8am to 27 July 2015 low@8am (see daily chart).
• Despite the plunge seen on last Tuesday, 12 August 2015  triggered by the sudden 1.9% devaluation of  Chinese Yuan (CNY), the Index has managed to hold above the trendline support in place since 06 July 2015 low and formed a bullish daily  “Dragonfly Doji” (see daily chart).
• This trendline support is now at 2078 (see daily chart).
• The key intermediate resistance is still the descending trendline joining the highs since 21 July 2015 @12am now at 2098 (see 4 hour chart).
• The short-term Stochastic oscillator still has some downside potential before reaching its extreme oversold region. This observation suggests the risk of a pull-back in the price action of the Index (see 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate support: 2078

Pivot (key support): 2050/2040

Resistance: 2098 & 2128/2138

Next support: 1980

Conclusion

The Index may see a pull-back towards the intermediate support at 2078 before another round of potential upleg occurs.

The intermediate resistance at 2098 (the descending trendline) still needs to be taken out in order for the Index to gain impetus for a further upside movement to target the 5-month sideways range top at 2128/2138.

On the contrary, failure to hold above the 2050/2040 weekly pivotal support is likely to damage the long-term bullish trend to see the start of a potential severe correction to target 1980 in first step.

Disclaimer

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 email, 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. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin 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 cityindex.com.sg for the complete Risk Disclosure Statement.