US 500 Index – Earnings Season Set to Add Increased VolatilityUS 500 IndexPEPPERSTONE:US500PepperstoneThe conclusion of peace talks over the weekend between US-Iran without a deal being agreed, coupled with President Trump’s decision to blockade the Strait of Hormuz to Iranian shipping have grabbed the early headlines this morning. This has seen the US 500 fall to an early low of 6731 before recovering some of its losses to trade back higher around 6775 (-0.7%) at the time of writing (0700 BST). However, it is entirely possible that the focus for US 500 traders could shift later today towards the start of an important earnings season for US corporates, with several key releases across the next 5 days. Of course, the sustainability of the fragile ceasefire agreement currently in place between the US-Iran will continue to be a key driver, but on the earnings front, the week could be dominated by updates from the major US banks with Goldman Sachs reporting later today (before open), then JP Morgan, Wells Fargo and Citigroup’s latest results due on Tuesday (before open), Bank of America and Morgan Stanley on Wednesday (before open), BNY Mellon due Thursday (before open), and then State Street on Friday (before open). Expectations are high, due to strong interest income and investment banking fees, so there could be room for disappointment, however traders may also be interested in comments from the boardroom regarding how energy driven inflation could be impacting household and business finances, future earnings and the economic outlook for the remainder of the year. It could be a similar focus for when US consumer giant Johnson and Johnson reports on Tuesday (before open), with Pepsi Co (before open) and then Netflix (after close) on Thursday. These results may help to set the sentiment backdrop moving forward across the week, meaning staying apprised of the technical outlook could also be important to see where key support and resistance levels may reside that could have a direction impact on US 500 moving into Friday’s close. Technical Update: Latest Recovery Testing Potential Resistance Levels While the announcement of the US-Iran ceasefire saw further positive momentum emerge for global stock indices, price strength was already developing in the US 500 index since the March 31st session low. From this downside extreme (6312) into last week’s high (6847) the market gained 8.5%, although as the chart below shows, this upside move could now be back to important resistance levels. In this situation, traders may find it useful to identify and then monitor potential key support and resistance levels to establish where the next directional themes may emerge. Potential Resistance Levels: Having seen price strength so far in April, resistance levels are naturally the first area to focus on. As shown in the chart below, the latest upside has tested what might be viewed as the next potential resistance at 6847, a level which is equal to highs posted on March 6th, 10th and now April 10th. How this level is defended on a closing basis this week could offer possible clues to next directional themes for the US 500 index. Successful closing breaks above 6847 may lead to further attempts at price strength and tests of higher levels. Such moves could suggest scope back toward the next potential resistance level at 6894, which is the March 5th high, even 6969, which is equal to the February 25th session high. Potential Support Levels: The resistance level at 6847 currently remains intact, suggesting potential risks for renewed price declines. This could see tests of initial support at 6725, a level which is equal to the 38.2% Fibonacci retracement of last week’s price strength. Closing breaks below 6725 could open moves to lower levels. If closing breaks below 6725 were to develop, it may shift focus toward the next support at 6687, which is the 50% retracement. Breaks below 6687, could open the way for moves toward 6649, which is the 61.8% level, and even toward 6527, the April 6th session low. The material provided here has not been prepared accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.