Trade of the week
How to go long S&P 500
After the swift drop at the end of last week, the S&P 500 appears to have found support, so this week's trade is to go long on the S&P 500 with a stop at 6193.
(AI video summary)
Current trade overview
This week’s 'Trade of the week' is a bold move: going long on the US 500 (S&P 500). While some might consider this counterintuitive following Friday’s disappointing United States (US) jobs data, recent market activity suggests the negativity may be overstated.
A strong recovery in early Monday trading, coupled with solid performance during Sunday night’s session, has provided traders with a potential near-term low to work from. This creates a defined technical level to trade against.
Trade setup
- Entry point: current market level (following early Monday recovery)
- Stop loss: is set at 6190
- Target: anticipate a recovery beyond initial resistance levels
Risk-reward ratio
Defined by the stop loss level at approximately 1:2, based on expected bounce and historical resistance levels.
Market context
Looking back to early July, a pattern has emerged around the 6200 level, which appears to be acting as a key support zone. Buyers stepped in near this level on multiple occasions, notably on 7 July and again on 16 July, reinforcing its significance. As a result, traders are treating this area as a line in the sand.
A 50-day moving average is also converging in the same zone, adding further technical justification for the setup
Cautionary note: while this trade presents a structured opportunity, market conditions can change rapidly. Traders are advised to consider their risk tolerance and market outlook before engaging in this trade.
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