Technical Analysis SP500 : 2019-06-21

IFC Markets

Master Trader
Oct 31, 2012
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London (Great Britain)
www.ifcmarkets.com
Positive data and dovish Fed bullish for SP500

Federal Reserve indicated it would act to support expansion with data pointing to continued strength of US economy. Will the SP500 stock index continue advancing?

US monetary authority indicated a leaning toward easier policy at June 17-18 policy meeting. While the Federal Reserve left federal funds rates unchanged in 2.25%-2.5% range, chairman Powell said the central bank would “act as appropriate to sustain the expansion”. US economic data were positive on balance ahead of the Federal Reserve meeting: US retail sales grew 0.5% in May, industrial production rose 0.4% when 0.2% rise was expected, and utilization edged up 0.2 percentage point to 78.1%. And while housing starts declined 0.9% on month in May, building permits rose 0.3% after 0.2% increase in April. With the Federal Reserve vowing to take measures if expansion is jeopardized in case of prolonged US-China tariff standoff positive economic data are bullish for US equities market.

SP500_O_21June2019.png


On the daily timeframe SP500: D1 is rising since failure to close below Fibonacci 61.8 level. It has returned above 200-day moving average MA(200). These are bullish developments.

  • The Donchian channel indicates uptrend: it is tilted up.
  • The Parabolic indicator has formed a buy signal.
  • The MACD indicator is above the signal line and the gap is widening, which is a bullish signal.
  • The RSI oscillator is rising but has not reached the overbought zone.
We believe the bullish momentum will continue as the price breaches above the upper boundary of Donchian channel at 2959.22. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower Donchian boundary at 2866.47. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (2866.47) without reaching the order (2959.22), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary


Order Buy
Buy stop Above 2959.22
Stop loss Below 2866.47