Australian Markets
The XJO is expected to edge lower on open this morning. U.S futures closed mildly in the green and they are flat this morning.
Yesterday our market had a strong rally, but faltered. We tried to move back into the consolidation range and trade back near 7,250, however after the morning session we pulled back to roughly 7,220 which is just below the floor of the recent consolidation to settle on the 50 day MA.
7,200 to 7,150 remains the key supports for our market. This morning we should stall around here and see whether the U.S has the strength to break the key resistance they stalled at on Friday.
We could also be trading in a broad pennant pattern. There certainly is a short-term downtrend line in play that has kept a bearish slat to out market since arguably the start of Feb. However, there could also be a broad underlying uptrend line the market could have bounced off the past few days that started from our lows back in October last year. We will have to wait and see how it plays out, but this would mean we would expect a break higher.
US Markets
US markets were closed overnight for the memorial day holiday. US futures did trade however and mostly closed higher, though movements were small. It is expected that US lawmakers will pass the debt ceiling deal tonight, which could provide a bit further optimism, though it is likely attention will then quickly turn to something else.
The S&P500 currently sits at the top of the sideways consolidation range, holding right at the 4,200 resistance. Should we see a break above this level, we will likely see an uptrend for the S&P500, with a possible upside target of 4,300.
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Sam Green is the Portfolio Manager at Emerald Financial, whilst also being an Equities and Derivatives expert for his clients at TradersCircle.
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