sp 500 daily outlook fri 04 dec another potential down leg below 20642072 resistance 1789362015

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What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has plummeted below the 2070/2062 weekly pivotal support in line with the other major European stock indices as the latest monetary easing measure from the European Central Bank (ECB) have disappointed market expectations.

 Key elements

• The expected medium-term (1 to 3 weeks) upside movement has been put on hold through the bearish break below the 2070/2062 weekly pivotal support.
• The next key support rests at the 2018/1997 critical zone which is the pull-back support area of the “Double Bottom” bullish breakout (see daily chart).
• The daily (medium-term) RSI oscillator still has room (as depicted by the pink box) for further potential downside before reaching its support. This observation suggests that yesterday’s decline in price action still has room for further downside as downside momentum remains intact (see daily chart).
• On the shorter-term, the Index has started to evolve into a descending channel in place since 02 December 2015 high with its upper and lower boundaries at 2064 and 2024 respectively.
• The next resistance stands at  2072 which is defined by the former short-term swing low area at 24 November 2015 and the 50% Fibonacci retracement of yesterday’s steep down move from 03 December 2015 high @6pm to the  today’s current low of 2041.

Key levels (1 to 3 days)

Intermediate resistance: 2064

Pivot (key resistance): 2072

Support: 2024/2018

Next resistance: 2106

Conclusion

Short-term technical elements have turned bearish and as long as the 2064/2072 key short-term resistance zone is not surpassed, the Index is likely to stage another down leg to target the next support at 2024/2018.

On the flipside, a break above the 2072 daily (short-term) pivotal resistance may invalidate the bearish move for a squeeze up to retest this week high at 2106.

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