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S&P500 Continues to Chop Back and Forth

By:
Christopher Lewis
Published: Jan 27, 2022, 16:51 UTC

The S&P 500 has gone back and forth during the course of the trading session here on Thursday as the 200 day EMA is offering a significant amount of resistance.

S&P500 Continues to Chop Back and Forth

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The S&P 500 has shown itself to be very noisy, as we are sitting just below the 200 day EMA and of course there is a lot of noise around that indicator under most circumstances. That being said, you need to keep in mind that the markets are in disarray at this point in time, as people are worried about the massive quantitative tightening that the Federal Reserve is getting ready to embark upon, and of course the US dollar strengthening as a result has also put a big dent into this market.

S&P 500 Video 28.01.22

As people are worried about the Federal Reserve tightening into a slowdown, recession is a very real threat, and of course that will be priced into the stock markets as well. If we break down below the 4200 level, then it is likely that this market will “flush lower” and reach towards the 4000 level. On the other hand, if we turn around a break above the highs of the last couple of days, then it is likely that we could go looking towards the 4500 level. That seems very unlikely, but I also recognize that the 4500 level will more than likely offer a significant amount of resistance as we had previously seen a lot of support there.

In general, I think this is a market that you have to favor selling on signs of exhaustion, because quite frankly all of the fundamental reasoning for this market to go higher is very thin to say the least. All things been equal, this is a market that I think has a lot of work to do before it can change its attitude.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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