The S&P 500 went back and forth during the trading session on Thursday, as we have reached towards the 3200 level before bouncing a bit. That is a large, round, psychologically significant figure, and of course is an area that people have seen both buyers and sellers again. The 200 day EMA sits underneath there as well and is starting to grind to the upside. Looking at the candlestick so far, the market does look a bit supportive, but I think given enough time we will find plenty of reasons to get involved. As things stand right now, it has been all about the US dollar, and the inverse correlation.
S&P 500 Video 25.09.20
Looking at the chart, if we were to break down below the 200 day EMA it then opens up the possibility of reaching down towards the 3000 level. However, if we turn around and rally a bit during the trading session, we could go looking towards the 50 day EMA, which I think also offers resistance. You need to pay attention to the US Dollar Index more than anything else, as the correlation has been almost exact over the last several weeks. If the US dollar rallies, that means that the stock market should more than likely selloff.
On the other hand, if the US dollar starts to fall apart, that could have people looking towards the stock market and risk appetite in order to get involved. We are still in an uptrend, so keep that in mind but there is a lot of concern out there over the last couple of weeks. As we get closer to the election, we will probably have more noise.
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This article was originally posted on FX Empire