- The S&P 500 rallied during the trading session on Thursday, breaking above the 6580 level rather quickly.
- That being said, the market is likely to continue to be very noisy, but I think given enough time we will continue to see buyers jumping into this market as Wall Street continues to celebrate the idea of a slowing US economy, because it lets them gamble with “cheap money.”
- This is the distortion that we have seen in the market since the Great Financial Crisis, and one would have to assume that it will continue to be the same situation.
Massive Channel
We are in the midst of a massive channel, and as we are in the middle of that range, it makes a certain amount of sense that we just simply follow the same pattern. If we do pull back from here, I would anticipate that the 6500 level offers a significant amount of support. If we break down below there, then the bottom of the overall channel, somewhere near the 6480 level, should end up being significant support, especially with the 50 Day EMA sitting just below there.
If we do rally from here, the 6700 level could be a target as it is the top of the overall that we have been in for some time, and therefore I think it will continue to be something that we need to pay close attention to. Ultimately, the size of the candlestick is also bullish, and therefore it’s likely going to be a situation where momentum could kick off a bit of a “FOMO trading” which we have seen more than once in this market. Ultimately, Wall Street is celebrating cheap money, and that’s really all they care about at this point. Eventually, the actual economy might be an issue, but as things stand right now, it doesn’t that overly worried about it.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
