sp 500 daily outlook fri 25 sep 1910 key range support met potential recovery is likely to occur 140

(Click to enlarge charts)

What happened earlier

The U.S. SP 500 Index (proxy for the S&P 500) has staged the expected “last push down” towards the downside target (key support) at 1910.

Please click on this link for a recap on our previous daily outlook.

Key elements

• The Index has tumbled towards the lower limit (support) of the sideways range in place since 28 August 2015 at 1910 which also confluences closely with the 1.236 Fibonacci projection from 28 August 2015 high to 18 September 2015 high.
• In conjunction with the aforementioned element, the price action has formed a daily “long-legged candlestick” pattern yesterday and its 4 hour (short-term) Stochastic oscillator has flashed a bullish divergence signal at its oversold region even though the Index shaped a “lower low”. These observations that downside momentum has abated at the 1910 sideways range support.
• In the shorter-term (1 hour chart), the Index has traced out a bullish “Inverse Head & Shoulders” chart configuration (depicted by the light blue boxes). The neckline resistance of this chart configuration stands at 1953 which also confluences with the pull-back resistance joining the lows since 02 September 2015 (in dotted red).
• The next significant short-term resistance stands at 1979 which is defined by the swing highs of 18 September 2015 @11pm and 21 September 2015 @10pm

Key levels (1 to 3 days)

Pivot (key support): 1910

Resistance: 1953 & 1979

Next resistance: 1854/1835

Conclusion

Latest technical elements have suggested that the downside momentum of the decline in place since 18 September 2015 (the “fateful” day that the FOMC’s announcement to keep the overnight Fed Funds policy interest rate unchanged at 0.25%) has abated.

The Index now needs to break above the 1953 neckline resistance of the impending bullish “Inverse Head & Shoulders” chart configuration to gain impetus for a further potential recovery to target the next resistance at 1979 in the first step.

However, failure to hold above the 1910 key sideways range support is likely to put the expected recovery scenario on hold for a slide to retest the “Black Monday”, 24 August 2015 low at 1854/1860.

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