From this morning’s initial post:
USDJPY has reached a TL of support (purple, below) so we’ll watch to see if it gets a reversal here that allows SPX to bottom out at 2041 (the 1.272). If not, SPX’s next support isn’t until 2031 (1.618) and then the previous high way down at 2019. Key support levels for USDJPY are the SMA10 at 119.239 and the purple .886 at 118.59.
USDJPY rebounded just past the .886 at 117.95, prompting SPX to level off just shy of the 1.618 at 2034 (hey, if rigging markets were easy, everybody would do it!) From here, the next steps were somewhat predictable.
The first challenge is to get back above the red TL and regain the rising channel. It should be the next move after SPX bottoms out this morning, and will probably present itself as a backtest initially. This would normally be a negative development — setting up further losses. But, a push back above the red TL is more likely — either later today or tomorrow.
SPX gained 23 points to backtest the red TL, whereupon it fell six points before taking another shot. It pushed above the red TL late this afternoon for a 26-point pop off this morning’s lows.
Simple. By closing below the .618 at 2062, it leaves open a significant upside target to rationalize the next leg higher. Had SPX tagged the .618 during the day, sellers might have shown up to push prices back below the red TL.
Just as importantly, by reaching 2060.60, SPX closed the huge gap that would have otherwise been left in the wake of this morning’s sell-off. Instead, traders are left wondering whether the recovery was merely a rebound/gap fill or the start of another leg higher.
For the Masters of the Universe and their un-rigged market: Mission Accomplished.