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U.S. Indices Flat: S&P 500 Threatens To Extend Bearish Trend

Posted Tuesday, October 9, 2018 by
Shain Vernier • 1 min read

After a choppy first hour of trade, the U.S. indices appear to be finding solid ground. It appears that both the S&P 500 and DJIA have rebounded after another weak start. At press time, bids are hitting the market and the four-day losing streak may be drawing to a close.

This week’s early U.S. economic calendar is vacant, with no primary market movers scheduled. However, a bit later on today there is a collection of short-term U.S. Treasuries auctions. Rates are expected to increase over the previous release, extending the trend of recent growth in the debt market. Traders will be watching these auctions closely for growing yields and further signs of institutional participation.

S&P 500 Technical Outlook

December E-mini S&P 500 futures are showing some life after a bearish overnight session. Prices are trending higher on intraday time frames, pushing daily ranges into the green.

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

Here are the levels of topside resistance worth paying attention to:

  • Resistance(1): 38% Current Wave Retracement, 2896.75
  • Resistance(2): Bollinger MP, 2904.00
  • Resistance(3): Daily SMA, 2912.50

Bottom Line: The 38% Current Wave Retracement (2896.75) is a key area for this market. If buyers become exhausted at this level, then the daily downtrend will remain valid.

A short from the beneath the Bollinger MP will be a good spot to scalp if the 38% Retracement gives way. For the remainder of the session, I will have sells in from 2903.75. With an initial stop at 2905.50, this trade produces 7 ticks on a 1:1 risk vs reward ratio.

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