S&P 500 looks short-term top heavy as USD/JPY slides and silver price rises
S&P 500 looks short-term top heavy as investors are getting increasingly cautious with regards to US tax policy while USD/JPY has resumed its downtrend and the silver price breaks out of its recent consolidation phase.
S&P 500 capped by resistance
The S&P 500, even though trading in positive territory for the year, remains capped by this week's high at 5,968 and is expected to slip through its accelerated uptrend line at 5,910 on Wednesday.
Since the US index is as overbought on the daily Relative Strength Index (RSI) as it was in July 2024 and has left a huge gap open between the 9-to-12 May 5,691 high and 5,786 low, this may still eventually be filled in.
Slips below the 5,865 15 May low may find support between the January low and the late March high at 5,786-to-5,773 ahead of the 200-day simple moving average (SMA) at 5,764 and the 8 may 5,720 high.
Resistance above this week's 5,968 high can be spotted at the 5,986 March high and the psychological 6,000 mark ahead of the 26 February high at 6,009.
USD/JPY continues to slide
USD/JPY's sharp rally to its 12 May high at ¥148.65, a six-week high, has been followed by seven straight down days.
The early May low at ¥142.36 is in focus, followed by the 11 and 28 April lows at ¥142.06-to-¥141.97. Were this support zone to give way, the April trough at ¥139.89 would be back in sight.
Resistance above the breached April-to-May support line at ¥144.75 is seen between the 2 May high at ¥145.92 and the 55-day SMA and the March low at ¥146.06-to-¥146.54. While this resistance area caps, the short-term downtrend is deemed to be intact.
Silver price probes upper range boundary
The spot silver price tests the upper boundary of its May sideways trading range and in doing so has risen above its 55-day SMA at $32.7591 per troy ounce.
The March-to-May downtrend line break at $33.0000, now because of inverse polarity a support line, puts the 6-to-13 May highs at $33.2365-to-$33.2481 on the cards. If overcome, the late April peak at $33.6955 would be next in line, followed by the March peak at $34.5880.
Minor support below the breached downtrend line and the 55-day SMA at $32.7591 comes in at Tuesday's $32.1280 low. While it holds, upside momentum should prevail.
In case of failure at $32.1280, the 12 May low at $31.8870 would be back in focus, together with the 1-to-15 May lows at $31.6665-to-$31.6525. Further down the 200-day SMA at $31.3950 provides further potential support.
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