The title of this post has been ‘on repeat’ for three weeks; that’s because the S&P 500 pencils in a fresh all-time high (ATH) each week!
January ended in unchartered territory, touching a fresh all-time high of 4,931 and adding +1.6%. This extended recovery gains from the near-test of monthly support coming in from 4,102 in October 2023. Recent posts by the FP Markets Research Team communicated that the index has been entrenched in a dominant uptrend since breaking out in early 2013, and aside from two sizeable corrections in 2020 and 2022, the uptrend has been one-sided.
Overthrown weekly channel resistance
Extended from the high of 4,607, channel resistance was unsaddled last week, pulling the index within striking distance of the widely watched 5,000 barrier. Sellers barely put up a fight at the channel resistance. While a bull trap could still unfold just north of it this week, a test of 5,000 is likely on the table before this takes shape, if at all.
Ultimately, the focus on the weekly timeframe this week will be on the area between 5,000 and the channel resistance. Breaking through offers at 5,000 supports additional outperformance, though a bearish move off 5,000 that forces a close back under the channel resistance could prompt profit-taking back to as far south as support at 4,743. The latter is supported by the Relative Strength Index (RSI) elbowing into overbought territory (note the monthly chart also shows early signs of negative divergence).
Daily support at 4,869 - 4,903?
Having noted the index refreshing all-time highs last week, entering at the high is seldom a good approach. Traders and investors tend to monitor for any correction within the trend to buy dips. On the daily timeframe, two areas of interest are calling for attention this week: the nearby daily support area at 4,869-4,903 and the previous ATH at 4,818. However, for buyers to commit to either support area, they’ll likely want to see the price reverse ahead of the 5,000 level or, alternatively, break the 5,000 base to run offers before retesting either of the two supports.
Source: TradingView
This material on this website is intended for illustrative purposes and general information only. It does not constitute financial advice nor does it take into account your investment objectives, financial situation or particular needs. Commission, interest, platform fees, dividends, variation margin and other fees and charges may apply to financial products or services available from FP Markets. The information in this website has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the information in light of your objectives, financial situation and needs before making any decision about whether to acquire or dispose of any financial product. Contracts for Difference (CFDs) are derivatives and can be risky; losses can exceed your initial payment and you must be able to meet all margin calls as soon as they are made. When trading CFDs you do not own or have any rights to the CFDs underlying assets.
FP Markets recommends that you seek independent advice from an appropriately qualified person before deciding to invest in or dispose of a derivative. A Product Disclosure Statement for each of the financial products is available from FP Markets can be obtained either from this website or on request from our offices and should be considered before entering into transactions with us. First Prudential Markets Pty Ltd (ABN 16 112 600 281, AFS Licence No. 286354).
Recommended content
Editors’ Picks
EUR/USD recovers from two-year lows, stays below 1.0450
EUR/USD recovers modestly and trades above 1.0400 after setting a two-year low below 1.0350 following the disappointing PMI data from Germany and the Eurozone on Friday. Market focus shifts to November PMI data releases from the US.
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as investors await US PMI data releases.
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark
Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.