(Click to enlarge charts)
What happened yesterday/earlier
In our earlier short-term daily outlook/strategy posted last Friday, 04 Mar 2016 (please click here for a recap), we have highlighted that the rally seen in the U.S. SP 500 Index (proxy for the S&P 500 futures) is coming close to a short-term risk zone of 1994/2003 (excess) where the Index is likely to shape a pull-back/consolidation.
The Index has surpassed the 2003 excess level slightly in the U.S. session on 04 Mar 2016 (printed a high of 2009) after the release of the latest U.S. nonfarm payrolls data for February 2016 and staged the expected pull-back thereafter in yesterday, 07 March 2016 session after an attempt to break above 2009.
- Current price action has continued to inch lower from yesterday U.S. session high of 2006. The lower boundary (support) of the on-going bearish “Ascending Wedge” configuration stands at 1970 which is also the former minor swing high area of 26 February 2016.
- The hourly (short-term) Stochastic oscillator still has a bit of room left for further downside before reaching its extreme oversold level. This observation reinforces a potential dip in price action towards the “Ascending Wedge” support at 1970.
- Right below the 1970 support will be the 1963 level which is defined by the 23% of the current countertrend rally that started 11 February 2016 to last Friday high of 2009 and the former swing high area of 26 February 2016.
Key levels (1 to 3 days)
Pivot (key support): 1970/63
Next support: 1922
Short-term technical elements suggest a further potential dip towards the 1970/63 pivotal support before the Index stages the potential final upleg of the on-going second phase countertrend rally to retest last Friday minor swing high at 2009.
On the flipside, failure to hold above the 1970/63 pivotal support is likely to invalidate the last push up scenario to see the start of a deeper decline to target the next support at 1922.
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