Today we have posted the S&P all sessions chart as this is hovering above a key level at the moment. At the very beginning of February we tried to get back above the 38.2 Fibonacci Retracement of the move down from the middle of October at 13818 but could not sustain this. The very same happened again at the end of February. Since then we have been sliding towards the lows made back on the 22nd and 23rd of January at 12553. As we approach this level we are seeing a pick up in volume, which means the eventual winner of this battle will see a decent reaction in their favor. There could well be further divergence between US and UK markets as the FTSE has already breached key support.
Indicators in Play
Much of the literature relating to volume in Technical Analysis suggests that a high volume reversal signal has far greater strength and this is more often the case. However, when we are approaching a big support or resistance area, it tells us that a big battle is developing. The subsequent reaction is usually a fierce move in the favor of the overall victor.
Summary
We are still longer term Bearish especially below 13818. We would look to sell strength to the last failure high at 13450. In the shorter term we will be watching 12553. A close below here is bad news but there could well be a strong defense first time round.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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