The Asian and European session saw some sustained buying across the markets. Nevertheless volumes on SP are very thin. So it all comes down to the US market open, when real volumes come into the market.
Possible scenario: if the US session open with a short bias, but somehow finds support in the 1890 area, followed by a quick bounce back, then I would see a retest of the 1970 area in the following couple of weeks.
Technically, it would make sense for a final bounce back from these longer time-frame support levels, the it would also give a breather to the market (which slightly went into oversold territory) and also a chance for the short-term MAs to catch up.
Why 1970 would be a good retracement target:
- 50% Fibo retracement for the down move started at the beginning of 2016. (If shorters are aggressive, even the 38% level might hold)
- mid would also drop towards these levels. The market move abruptly towards the lower , thus a retest of the mid would only indicate a healthy short.
- has time to move towards the 50 level (usually a resistance point on downtrends)
Once again, this is a scenario that you should take into consideration in case the markets are not yet ready to drop below the support levels at 1850-1860. My view on the market is overall and the retracement scenario can be validated once we see the US open behavior and when the market goes above 1925.
Until then it is best to stick to your shorts! :)