S&P 500 futures started to anchor into a declining channel since the 1375.06 high on July 5th. It broke below June’s rising trendline on July 12th, but has pulled back since. As we get ready for the 7/13 US session, the pullback is testing the short-term declining channel resistance.
What the market does this Friday will be key. If it respects the channel and continues lower, we have more reason to believe that the breakout is valid, and that risk-bears are in control for next wee, with the next support pivot at 1303, before exposing the 1262 June low.
Otherwise, a break above the channel, and a break above the 1340-1341 area should invalidate the breakout, and reflect a market that continues to hold risk-on dynamic, bringing July’s high at 1375.06 back in sight.
Remember risk-on gives USD and JPY strength, and pressures commodity currencies as well as the EUR and GBP. Risk-off has the opposite effects.