S&P 500 Technical Analysis
The S&P 500 initially pulled back a bit during the trading session on Monday and then turned around to recapture the 3700 level in the futures market. At this point, the market might be a little bit oversold, but I think any rally at this point will be thought of as a shorting opportunity at the first signs of exhaustion. The market is continuing to look at rallies with suspicion, as it very well should. The Federal Reserve is going to do everything it can to tighten monetary policy, and because of this, it’s likely that we will see even lower prices.
The 50 Day EMA is sitting just below the 4100 level and dropping from there. At this point, it looks like it will head to the 4000 level rather quickly, which is the large, round, psychologically significant figure that a lot of traders are paying close attention to. However, with the Federal Reserve tightening its monetary policy the way it is, it’s likely that we will see plenty of downward pressure. Furthermore, earnings estimates have to be written down, most of which have not been done yet.
Ultimately, we are a little oversold, but that oversold condition should offer a nice selling opportunity above, therefore I think signs of exhaustion are what you’re looking for after short-term rallies. It’s also worth paying close attention to the US dollar, as it will have a major influence on where we go next, and therefore I think it’s probably worth paying close attention to the US Dollar Index. Ultimately, I believe the volatility will continue to be something that you need to pay close attention to.
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This article was originally posted on FX Empire