E-mini S&P 500 (CME:ESM14)
The S&P 500 has recovered nicely in the second half of April, gaining back almost all the ground that the index had lost from 4/4 to 4/13. Price now finds itself near the upper portion of the recent trading range, with near-term momentum favoring a bullish argument for stocks. Better than expected earnings have helped support strength in the indices over the past few days. However, Geo-political tensions overseas continues to be the “wildcard” in the markets. Hostility between Ukraine and Russia continues to weigh heavily on the markets as the threat of war continues to be a very real possibility.
From a technical standpoint, price action in the S&P appears to point to higher prices as price has rebounded nicely from the 4/13 trough and now looks to hold above support at 1867.75. Above here, the 1876.75, 1887.25 and 1892.75 levels are all potential resistance targets and could be used by traders to quantify potential trading opportunities. Near-term positive momentum will likely remain in play above the 1857.00 support pivot on the charts. One strategy that does appear to have merit given the current environment in the S&P is buying weakness into support pivots in anticipation of a reversal. As price continues to make higher-highs and higher -lows, the probabilities appear to favor a bullish stance in the S&P heading into today’s session.
The euro has been a mixed-batch thus far in the month of April with price action taking on a digestive tone. There hasn’t been much of a clear-cut directional bias in this market recently, which tends to lend itself to mean-reversion and momentum trading strategies. The RSI and Stochastic indicators can be very helpful in a market environment such as this because they assist traders in illustrating when price and momentum are out of sync. By using simple O.B./O.S. readings as well as bullish/bearish divergence signals, traders can use price action in unison with momentum signals to find high probability opportunities in the euro. A few levels of structure to keep an eye on are the 1.3842 pivot as well as the 1.3865 level, both of which could serve as near-term resistance.
Again, keep in mind the digestive nature of recent price action in the euro and understand that there may be some “noise” around these technical levels. Local support can be seen around 1.3810 and 1.3786. As one would anticipate in a market such as this, the RSI hasn’t highlighted any particular directional bias and trader should continue to monitor this indicator (relative to price) for potential opportunities in the Euro.