SPX has bounced impressively on the 78.6 retracement / 20 week MA. The BTFD reflexes are live and well. Everything in this chart screams ‘reversal’. But there is one last hope for bears.
Geometry:
Price approaches the .5 fib of the channel (red dotted line). This level corresponds to a 61.8% retracement, a zone in which bulls might take profit and bears could step in. We can see how the current channel is respected by price as SPX bounced precisely on the .25 fib line.
Elliott:
The ultra-bullish count would be a wave (i)-(ii), i-ii. In this scenario price would break out of the channel to the upside in a shortsqueeze-like wave 3 of 3.
On a lower timeframe, however, the previous wave down occurred in 5 impulse waves, and the current rally can form an ABC correction. This is a warning sign.
Oscillators:
Stochastic has not fully retraced into oversold, which increases the risk of an exhaustion of the bullish reversal. The McClellan Oscillator showed a slight bearish divergence.
Moving Averages:
SPX reclaimed the 50 and 21 day EMAs. If SPX can hold the 50 EMA, we look for a new active sequence.
How to trade it:
Bears might like the 4740 area to test a short position into a stalling SPX. A bullish idea is to look for a retrace towards the 50 (or 21) day EMA and begin to build long exposure into an active sequence that holds the EMAs during the next sessions.
Geometry:
Price approaches the .5 fib of the channel (red dotted line). This level corresponds to a 61.8% retracement, a zone in which bulls might take profit and bears could step in. We can see how the current channel is respected by price as SPX bounced precisely on the .25 fib line.
Elliott:
The ultra-bullish count would be a wave (i)-(ii), i-ii. In this scenario price would break out of the channel to the upside in a shortsqueeze-like wave 3 of 3.
On a lower timeframe, however, the previous wave down occurred in 5 impulse waves, and the current rally can form an ABC correction. This is a warning sign.
Oscillators:
Stochastic has not fully retraced into oversold, which increases the risk of an exhaustion of the bullish reversal. The McClellan Oscillator showed a slight bearish divergence.
Moving Averages:
SPX reclaimed the 50 and 21 day EMAs. If SPX can hold the 50 EMA, we look for a new active sequence.
How to trade it:
Bears might like the 4740 area to test a short position into a stalling SPX. A bullish idea is to look for a retrace towards the 50 (or 21) day EMA and begin to build long exposure into an active sequence that holds the EMAs during the next sessions.