(MENAFN- Daily Forex)

• The S&P 500 has risen during the bulk of August, starting near the 6200 level, and finishing closer to the 6500 level.
• It's worth keeping in mind that the month of August tends to be rather thin, as the lot of institutional traders will take holiday during that timeframe.
• Because of this, it makes a certain amount of sense that the market can be a bit choppy. In fact, we have seen a couple of selloffs that were turned around rather quickly. I believe that there is a bit of a signal in this alone.

Technical Analysis

The technical analysis for this pair is obviously very bullish, because we have gone straight up in the air since the bounce in April. Ultimately, this is a market that I think continues to see a lot of upward pressure, but we also have some things going on during the month of September that could come into play.

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We have the Federal Reserve interest rate decision, and perhaps more importantly, the statement that comes after it. All things being equal, the S&P 500 does like loose monetary policy, but we also have to pay attention to whether or not the Federal Reserve feels that the economy is starting to roll over, or if they are just trying to protect it. Ultimately, this is a market that will continue to see a lot of buying pressure eventually, but the question is whether or not we need to drop a bit first?

I think there is a built in“floor in the market” closer to the 6200 level, and as long as we can stay above there, it's likely that we will continue to see more of a“buy on the dip” scenario. However, if we were to give up the 6200 level to the downside, then I think at that point in time you could see a significant drop. This would more likely than not be a situation where the market gets nervous and perhaps the Federal Reserve is nervous, because in the past we have seen pretty significant selloffs once the rate cutting cycle begins. I think September is going to be very volatile, but I would keep an eye on the 6200 level. It's not until we are below there that I would be overly concerned.

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