2016-09-12 16:24:12

Review and dynamics
At the closing of the European session last Friday sales had activated at the global stock markets. The inaction of the ECB and the comments of the Fed Boston representative Eric Rosengren about the possibility of increase in interest rates in the near future, have increased negative sentiment among investors and traders. At the end of last Friday’s session the index Dow Jones Industrial Average fell by 2.1%, Nasdaq Composite - by 2.5%, the S&P500 by 2.45%. This is the strongest drop in U.S. indexes since June 24, (the second day of sales after the British referendum).

Since today’s opening session, the downward movement in the global stock indices has continued. The index S&P500 has broken down support levels of 2165.0 (ЕМА200 on 4-hour chart) and 2155.0 (ЕМА50 on the daily chart) and reached a strong support level of 2102.0 (Fibonacci 23.6% to the rise since February 2016 at the level of 1828.0 and ЕМА144 on the daily chart).

Our opinion
However, this movement can be considered as the long-overdue downward correction. The index &P500 remains in the ascending channel on the daily chart above the key support levels of 2090.0 (ЕМА200 on the daily chart) and 2102.0.

The decline to support levels of 2050.0 (Fibonacci 38.2%) and 2030.0 (ЕМА200 on the weekly chart) can be crucial for the bullish trend. However, only the breakdown of the support level of 2007.0 (Fibonacci 50.0%) may indicate the end of bullish trend.

As an alternative scenario the bullish trend can resume in the ascending channels on the daily and weekly charts with the upper limit at the level of 2270.0. The nearest resistance levels are 2155.0 and 2192.0 (highs of August). In the current situation, it is possible that the price will rebound from the support level of 2102.0.

Support levels: 2102.0, 2090.0, 2050.0, 2030.0 and 2007.0.
Resistance levels: 2192.0, 2172.0, 2165.0, 2155.0 and 2120.0.

Trading tips

Sell Stop: 2095.0. Stop-Loss: 2115.0. Targets: 2090.0, 2050.0, 2030.0 and 2007.0.
Buy Stop: 2115.0. Stop-Loss: 2095.0. Targets: 2125.0, 2155.0, 2165.0, 2192.0 and 2200.0.

At support level of 2102.0
At support level of 2102.0

Strong decline after long-lasting flat
Strong decline after long-lasting flat