S&P500 1H chart 10:45AM EDT 7/20/2012
The market S&P 500, which is a proxy for risk sentiment, topped off during the 7/19 session after barely edging out a new high for July. It is extending the risk-off decline into the 7/20 US session. The RSI is about to kiss 30, and while it is too early to say bearish momentum is established, it can be said the bullish momentum has been stalled, and the market is at least flat if not bearish.
For the bearish case, there is still the rising trendline connecting last Thursday’s (7/12) low near 1320 to this Tuesday’s low near 1340. If the market pushes below 1355, it should clear the trendline, exposing these two support pivots in the short-term.
This bearish scenario should be seen as a confirmation to the USD and JPY strength seen in the currency markets today after a week of consolidation, with EUR especially weighed down. IF the S&P 500 does bounce off the channel support, other USD and JPY crosses, ie. AUD/USD, GBP/JPY, are still above this week’s low, and still in business for another round of consolidation like this week’s.
