S&P 500 Index
- The S&P 500 Index is trading within a sideways channel, with prices recently closing near the middle of the range (dashed green line). The middle of these structures typically act like a magnet, with prices tending to move back towards it after testing either end of the channel.
- Should prices break below the middle of the range, the lower end of the channel becomes the next key support area, which currently coincides with the 200-day moving average (yellow).
- The lower end of the channel may offer an attractive long entry within the sideways range. A decisive break below the 200-day moving average would be bearish. Until that occurs, entering positions near the outer edges of the channel may offer opportunities to trade a reversal back towards the middle.
Daily chart
Source: Bloomberg. Past performance is not an indicator of future performance. You cannot invest directly in an index.
Fund implementation ideas
The US Government 10 Year Yield
- After breaking above the upward sloping channel at around 5.2%, the US 10-year Government Bond yield retraced back inside the channel. A move back inside following an upside break typically sees price action (yields in this case) move towards the middle of the channel.
- This is what occurred, with yields consolidating around the middle (dashed white line) before breaking lower.
The lower end of the channel, currently around 4.80%, remains the next key support level.
Daily chart
Source: Bloomberg. Past performance is not an indicator of future performance.
Fund implementation ideas
| Bullish (yields higher) |
|---|
| BBFD Geared Short US Treasury Bond Currency Hedged Complex ETF |
| Bearish (yields lower) |
|---|
| US10 U.S. Treasury Bond 7-10 Year Currency Hedged ETF |
Spot Gold
- Gold has closed below the key US$4,000 support level (white), leaving prices at an important decision point.
- Should prices close below the low of the breakdown candle (red line), the next major support area sits around US$3,500 (light blue).
- Conversely, a close back above US$4,000 and the descending trend line (green) would significantly improve the technical picture and shift gold back towards a neutral stance.
Daily chart
Source: Bloomberg. Past performance is not an indicator of future performance. You cannot invest directly in an index.
Fund implementation ideas
ABOUT BETASHARES TECHNICAL WATCH SERIES
In this regular monthly Technical Watch series, I provide a snapshot of what I am currently seeing within the charts.
I am aiming to make this series as helpful as possible, so I strongly encourage readers to request a particular analysis from me. To this end, I will try to include at least one ‘reader’s choice’ chart or a chart of particular interest.
When it comes to technical analysis and charting, one should always try to put emotion and personal opinions about the markets aside in order to focus on what the charts are showing. Of course, these notes provide general information only and readers should form their own views about the outlook for markets.
