S&P 500 Bangs Higher: Fibonacci Counter-Trend Play

Posted Thursday, February 22, 2018 by
Shain Vernier • 1 min read

U.S. indices are on the march, with the DJIA and S&P 500 posting strong intraday bullish trends. The DJIA has returned to levels above the key number of 25,000 on heavy participation. The S&P 500 is moving in lockstep with a gain of more than 20 points.

The strength in equities is not overly surprising, as the USD is showing signs of fatigue. Following the dovish tone of yesterday’s FOMC minutes, there is newfound optimism in U.S. equities and skepticism facing a March FED rate hike.

S&P 500 Technicals

It has been a wild February for the S&P 500. Huge crashes and large rebounds have defined the action. Technically, this is still very much a bull market. Nonetheless, the noise experienced early this month has left many investors wondering if the hammer is about to drop.

March E-mini S&P 500 Futures (ES), Daily Chart

Compared to the enormous ranges of February 5 and 6, today’s action is meager at best. However, the location of the session range is significant as several technical levels are being tested.

Here are the prices to watch for today:

  • Resistance(1): 62% Retracement of February Sell-Off, 2745.00
  • Resistance(2): Daily SMA, 2746.00

Bottom Line: At press time, price is trading in the immediate vicinity of the 20 Day SMA and Bollinger MP. These levels are drawing considerable two-way action, firmly beneath topside resistance. If they do not hold, a key Fibonacci level and Daily SMA may come into play.

For the remainder of the week, I will have sell orders in ahead of the 62% retracement at 2744.25. With an initial stop at 2747.50, this trade yields 13 ticks on price rejecting Fibonacci resistance.

As always, trade smart and keep leverage in check.

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