The S&P 500 closed near session lows yesterday for the second day in a row. As we head lower, technical levels become important as investors look towards support levels to protect capital. Personally, I think there could be room for further weakness maybe even to test/break the wave low of 2604.04 but this could take some time. Keep an eye on the following:
- The 0.236 Fib level confluences with the gap close level at 2683.50 (support).
- April wave high around 2717.49 is also in close proximity (support).
- RSI trendline break would be considered a bearish signal.
- The bounce off the .618 is a nice supporting factor for a move to lower levels.
- Fib extension targets point to a move to 2543.48 ( 1.27) and 2468.78 (1.618)
One important factor to consider is the upcoming trade talks between China and America. If a trade deal can be arranged it would boost equities and the previous wave high resistance of 2817 will come to play.The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Rajan lectures for the Society of Technical Analysts at the London School of Economics and is a senior market analyst at FX Daily. He has previously worked as a fund manager and now provides commentary for some of the biggest websites in the world. Rajan analyses the main macro markets using tools like market profile, wave analysis and Fibonacci.