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Contributors 200 Day Moving Average is Key to Watching S&P 500

Stocks have been rallying for the past few days, which is setting the stage for a more significant end of year rally. But first the S&P 500 has to overcome an important level.

Take a look at the daily chart below.

200 Day Moving Average

The key level to watch is the 200 day moving average, which is now trading at 1,265.

In October the S&P 500 tried to cross above that important resistance level, but it failed. Then in November there was another failed attempt. Today the equity index is once again testing that key resistance area.

In order for the market to really have a big rally going into the end of the year, stocks must break and hold above that level. If this turns out to be another failed attempt, stocks will head lower and the dollar will rally.

So keep an eye on this key number of the S&P 500. It can help you guide your trades in the forex market.

In sum, if stocks fail to hold above 1,265, it will be a great opportunity to buy the dollar. If stocks manage to move higher from this level, it will be a good time to buy emerging market currencies against the dollar.

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