Plenty of Seller Action to Start the Week but has the SP500 Found a Point of Support?
Hi readers. Thanks for stopping by for Monday’s update. We have all seen the carnage that has been happening since late last week. The USD has continued to power higher while risk assets have continued to trade lower. Worries that the Fed will continue to hike rates at the expense of a soft landing continue to drive the USD and the fear we are seeing.
The GBP has also been in the headlines crashing to new all-time lows to the USD after the UK government announced new tax cuts that look to have many worried. The cuts are supposed to boost growth, but the market sees them differently. There’s been a rush out of the GBP, which also lines up with the current risk-off environment adding to the selling. The GBPUSD hit a new low of 1.0358 in today’s Asian session.
In all the worry, we have found something thing that could be worth keeping an eye on. The SPX500 daily chart has started to form a new double-bottom pattern. These can be reversal patterns, but we would want to give it some time in the current circumstances. We can see the two lows that are marked 1 and 2 also line up with support that goes back to December 2020.
If this is going to become a confirmed support point, we need to see the lows (1 2) hold with a new higher low to show further buyer strength. Any new break lower, and we will look for the current downtrend to continue. One point, the last few bars could be exhaustion, further supporting the double bottom, but buyers have to hold it.
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