I was so busy with trading eur/usd, that I totally forgot to check S&P500. This was my mistake, because there were some great investing opportunities.
Let’s have a quick look at S&P500. Trend up is strong, but there is a strong resistance – the one at 1407 points. Some traders expected a correction from here – and they were right.
First, there was a move to 78% retracement line and later we saw a move down to 161.8% extension. How could you know that you should sell S&P500? Take a look at 5 and 20 expotential moving averages. It was the first cross since three weeks! In that case it was a good signal to enter a short position.
In the longer term view, there is still a trend up. It is not a surprise that Fibonacci retracement lines on daily chart works great. For now correction ended at 38.2% retracement line. In the same place there is a 20 moving average.
This support works for now, but it is hard to tell what will be next for S&P500. There was no strong correction since three months. Personally I wait now. I watch resistance at 1407 points. The break above it may lead to another strong move up. If S&P500 will break down below 20 moving average, correction may be deeper.
Few words about eur/usd, which is back at 1.33 resistance. It is a 50% retracement line, so break above may lead to move up. The situation is very interesting here.
If there will be a break above 50% retracement line, I suggest to switch the view and watch for extension lines:
We have few potential exit areas, but first we should see a break above 1.33.