Today's technical analysis post looks at GBPUSD and the S&P 500.

GBPUSD

GBPUSDMay16

Friday's price activity saw the bears take control of the market pushing prices below the support zone of 1.4400/1.4375 to make a low of 1.4340. That momentum has continued today with prices getting as low as 1.4332 after trading as high as 1.4383. Now that price has fallen through the 1.4400 level this will now act as potential resistance for the time being until we see a break above this level. In addition downside pressure may remain until the 61.8% retracement level of 1.4293 and potential support of 1.4330 which is the 50% retracement level of the rally from February lows. Moreover this could also be a test of the neckline (the purple line) of the inverse head and shoulders pattern adding potential strength to the support zone.

However the bearish crossover in the MACD may still add weight to further price falls. This week sees a great deal of UK economic data which could certainly affect the sentiment of this market. Tuesday's releases include UK and US inflation, with Wednesday releasing UK employment data and Thursday's we will see UK retail sales.

S&P 500

SP500May16

The S&P’s recent rally from February's lows may be showing signs of fatigue. As we can see by the chart the trend from the February's lows was broken on the 28th of April where retraced to the 23.61% retracement level of 2040.2. However over the last month and a half we maybe building a head and shoulders reversal pattern, which adds weight to the view that that the recent rally maybe running out of steam. Albeit price has not yet confirmed this potential reversal pattern as price is still above the neckline (pink line).

Currently the market is trading in and around a potential confluence of support. We are currently trading at the neckline and a previous set of lows and in addition an internal trend line from the highs of the market (purple line), should these levels not hold the potential measuring target could be 1966.0 which is just shy of the 50% retracement of the entire move. Should this confluence of support hold true short term resistance  lies at 2080 and 2100.

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