The S&P 500 initially pulled back a bit during the trading session on Wednesday, but then turned around to rally towards the top of the shooting star from the previous session. This is obviously a very bullish sign and if we can break above the 2750 level could allow the E-mini contract to go much higher. That being said, keep in mind that the 50 day EMA is closer to the 2800 level, which is also the 50% Fibonacci retracement level. That is an area that will attract a lot of attention. Because of this, I think that the upside is probably somewhat limited in this area, barring some type of announcement that sends the market into a frenzy.
S&P 500 Video 09.04.20
Looking at the chart, it’s also very possible that we turn around a pullback towards the 2600 level, perhaps even the 2500 level. Ultimately, I think that the market is still in the “bear market rally mode”, meaning that although we have gotten some positive signs, the reality is we probably have some work to do before completing an overall bottom. In the short term though, it certainly looks as if there is a bit of a short squeeze going on so don’t be surprised to see higher pricing. I’m very interested in what happens at 2800, as it is an area that I believe lines up technically and could create quite a bit of noise. Ultimately, I like the idea of shorting on signs of exhaustion, but we don’t have that quite yet.
This article was originally posted on FX Empire
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