- The S&P 500 has been very bullish heading into the month of July, and it looks very much like a market that is trying to break out to higher levels.
- That being said, the market is a little stretched going into the beginning of the month, so I am anticipating a little bit of a short-term pullback in order to offer enough value for traders to get involved in.
- Furthermore, the month of August is typically very negative as far as volume is concerned, so it would make a certain amount of sense that we might drift a little bit lower during the month, only to turn around and show signs of strength again.
Support Barriers
I believe that there is a significant amount of support near the $6300 level, but I also recognize that the $6150 level could offer support. Somewhere in that general vicinity, I would love to see a pullback, followed by a bounce that I can start buying. That being said, if we break down below the $6000 level, then things might be changing. However, I suspect that you will know that some type of external pressure is being applied to the market, and therefore you can just simply trade according to the overall risk appetite sentiment.
However, the market bouncing the way it has from the beginning of April suggest that there are plenty of buyers out there willing to get involved, even if we are a little overdone. To the upside, I would anticipate that the $6500 level could be a bit of a target, and if we can break above there then I think buyers will jump in and try to take advantage of the overall uptrend. I have no interest in shorting the market, at least not until we break down below the $6000 level, and even then, I would need to have an actual reason. We could have a bit of a “zombie rally” going through the month, meaning that we just simply drift higher in a very slow and methodical manner.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.