S&P500 Index Daily Chart 8/6/2012 1:55PM EDT
Since putting a low near 1260 in May 2012, the S&P 500 continues to rally in a choppy manner, within a rising channel. The rally reflects the market’s general risk-on dynamic throughout the summer so far, but the choppiness suggests that this is not necessarily a trending market. Also the daily RSI continues to be stuck between 40 and 60, reflecting a consolidation-type momentum.
Still, the ability to make new highs and higher lows with strong daily candlesticks, especially the one Friday (8/3), suggests there is further upside. A swing projection shown in the daily chart targets 1414-1415.
It should be noted that there are some key resistance here around the target. The April high for example is at about 1411.30, and the 2012 high established at the end of March, beginning of April is at about 1418.60.
Remember the correlation: Risk-on/Rally in the S&P500 should be USD-, and JPY-negative because that means shedding of safe haven. Vice versa, if the S&P 500 does turn lower, we should see the USD and JPY also return to strength. The AUD/USD for example has high correlation to the S&P500, and the daily chart looks very similar as this pair is also channeling up towards its 2012 highs:
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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