American investors are looking a little panicked this week as continuing pressure from Muller's investigation puts pressure on the Trump administration. At the same time the FED is looking all the more likely to act to lift rates under a new governor, as it sets it sights on restoring the status quo from over a decade ago. One thing that is clear is that equity markets are not a fan of the current movements and are looking all the more bearish in recent times. None more so than US equity markets which continue to come under renewed pressure despite some recent bullish resurgence in the face of adversity.
The S&P 500 for me is a key mover in the markets and a favourite of mine to cover as it loves to play off key levels and stick to the basics for the vast majority of traders. None more so today where it swooped lower before coming up short on the 100 day moving average and lifting slightly. Overall though, it was a bearish day to say the least and the market will be watching the 100 day moving average closely. While a fall below it has happened it so far, it has failed to continue lower past the 200 day moving average, so for me the 100 day continues to be the canary in the coal mine. While the 200 day moving average if cracked will be the death of that canary as the bears look to run the market lower. For now though support levels can be found at 2698, 2666 and 2628 on the charts, with markets keen to test these levels if given the chance. If the bulls can bring things back under control and play of the 100 day moving average, then resistance at 2473 and 2807 are likely to be the key levels that are targeted.
One of the surprise movers today was of course the GBPUSD which lifted on the back of positive news that the EU and UK had agreed the transition deal so far. It failed to deal with the Northern Ireland issue at hand, however it did push it further down the road thus providing some breathing space at this present time. One thing that seems to be a reoccurring trend is how the GBPUSD responds to positive Brexit news, whenever it feels that something is accomplished it does tend to rally.
So far the GBPUSD today has cracked through resistance at 1.3984 as it looks to extend higher on the positive news. There looks like there may be further potential as a result to extend to higher levels at 1.4135 and 1.4260 as well, but the Brexit news will need to continue to be positive and the USD will need to fall back a little as well. In the event that things do swing lower, I would expect to see support at 1.3984 come into play, but also the sharp trend line that has been in play for the last few weeks - watch that for a bounce if the bears do come back into the market.
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