Hard to tell but SPX could be getting ready to bounce and there are quite a few stocks already having a hard bounce which could be a leading indicator.
SPX has just passed the log 1:1 Fibonacci extension. This is an area for potential reversal and there will be plenty of short covering, but it doesn't prove the trend will actually reverse here.
But to add confluence SPX has already printed a wicked shakeout reversal through a supply trendline and can be seen SPX bounced with a wicked reversal at the previous trendline.
If it does bounce but retain the crash structure it may bounce to a 0.382 retracement from the top which not considering overshoot would hit $4213.
If it gets back to $4213 area then that could itself print a shakeout reversal of the resistant previous lows.
Alternatively the trend can carry on down to the next fib @ $3592 and good chance that will happen also.
I'm not sold on either but slightly leaning towards the 0.382 bounce.
And it could of course bounce higher and stagnate the trend. Another test of the 200DMA up at 0.618 is not improbable.
Lots of options here and i'll be waiting for significant shakeout reversals before entering any positions. Lets see what develops.
That said I do not think a full recovery is on.
Not advice.
SPX has just passed the log 1:1 Fibonacci extension. This is an area for potential reversal and there will be plenty of short covering, but it doesn't prove the trend will actually reverse here.
But to add confluence SPX has already printed a wicked shakeout reversal through a supply trendline and can be seen SPX bounced with a wicked reversal at the previous trendline.
If it does bounce but retain the crash structure it may bounce to a 0.382 retracement from the top which not considering overshoot would hit $4213.
If it gets back to $4213 area then that could itself print a shakeout reversal of the resistant previous lows.
Alternatively the trend can carry on down to the next fib @ $3592 and good chance that will happen also.
I'm not sold on either but slightly leaning towards the 0.382 bounce.
And it could of course bounce higher and stagnate the trend. Another test of the 200DMA up at 0.618 is not improbable.
Lots of options here and i'll be waiting for significant shakeout reversals before entering any positions. Lets see what develops.
That said I do not think a full recovery is on.
Not advice.
Comment:
Ok well there is now a solid shakeout reversal rejection of the 1:1 fib with long upper wick. Looks like its going to the next fib into a selling climax from here.
Comment:
Might have spoke too soon. Price reversing toward 1:1 again and this could be a big hammer forming. If it can close above the fib then good chance the bounce is on
Comment:
Well bounce it did an now back above the 1:1 fib. The exact bounce ratio was 1.163 $3859 from the equidistant 1:1 extension which for reference is the equivalent 0.719 retracement from the reciprocal of phi - 0.618.
Because if the C wave extension overshoots to 1.163 from 1 then 1 x 1.163 = 1.163.
And so for the phi reciprocal: 0.618 x 1.163 = 0.719.
So this is slightly less overshoot than the retracement short position that I took that topped at 0.757 $4637.
On the chart now green fib retracements from ATH and orange fib retracements from the thrust candle at $4637.
And now we can see that the second wave down - Y was 7 days faster that W and so this crash structure is gaining downside momentum.
For that reason it seems unlikely that this bounce can get all the way back to 0.75 $4558 from the top. But it will more than likely get back to the phi additive inverse 0.382 $4201.
So the bounce will probably reverse somewhere between those 2 points.
And of course there is a chance it carries on down in which case I'll wait till the 1.618 fib extension, but that seems less likely now.
MA 50 and 200 can also be potential reversal points.
If it did get back to 0.618 from the top that would actually be the magic 0.75 number but this time from the thrust candle. And that would be in the area of the 200MA. This I think if it could get back there would be a very good RR short entry.
That said it could be 0.5 from the top and that would see a touch of the 50MA.
So I will probably (try) to be patient here. SPX does like 0.75 and that would be a great short but if not then I'll just wait for the chart to hopefully reveal other routes in.
Any daily close below 1.163 will likely invalidate the bounce idea and will be equal odds it goes straight to 1.618 extension.
We'll see what happens next week.
Because if the C wave extension overshoots to 1.163 from 1 then 1 x 1.163 = 1.163.
And so for the phi reciprocal: 0.618 x 1.163 = 0.719.
So this is slightly less overshoot than the retracement short position that I took that topped at 0.757 $4637.
On the chart now green fib retracements from ATH and orange fib retracements from the thrust candle at $4637.
And now we can see that the second wave down - Y was 7 days faster that W and so this crash structure is gaining downside momentum.
For that reason it seems unlikely that this bounce can get all the way back to 0.75 $4558 from the top. But it will more than likely get back to the phi additive inverse 0.382 $4201.
So the bounce will probably reverse somewhere between those 2 points.
And of course there is a chance it carries on down in which case I'll wait till the 1.618 fib extension, but that seems less likely now.
MA 50 and 200 can also be potential reversal points.
If it did get back to 0.618 from the top that would actually be the magic 0.75 number but this time from the thrust candle. And that would be in the area of the 200MA. This I think if it could get back there would be a very good RR short entry.
That said it could be 0.5 from the top and that would see a touch of the 50MA.
So I will probably (try) to be patient here. SPX does like 0.75 and that would be a great short but if not then I'll just wait for the chart to hopefully reveal other routes in.
Any daily close below 1.163 will likely invalidate the bounce idea and will be equal odds it goes straight to 1.618 extension.
We'll see what happens next week.
Comment:
Also worth noting that yesterdays candle closed with a shakeout reversal through the lower supply trendline. Only the wick pierced through but candle closed bullish with body above.
Comment:
Bearish engulfing today and now looks certain that 1:1 will get tagged. Also there is a gap below that could get filled. Also interesting how price is weaving around the supply trendlines.
If SPX gap fills then rejects from 1:1 then get ready because a massive crash will be imminent. But we'll see, it may bounce also. Hard to tell right here.
If SPX gap fills then rejects from 1:1 then get ready because a massive crash will be imminent. But we'll see, it may bounce also. Hard to tell right here.
Comment:
Tag
Comment:
I'll have to start making more limit orders at these fibs. But nothing wrong with research before greed I think.
Comment:
Well that bounce off the fib was probably just a small short covering rally and now the trend has returned to the downside. With hindsight that would have been a dangerous scalp with on 0.45% max gain and why its best not to trade against trend.
Now that SPX has pushed down below the fib, the bounce has become an upper wick shakeout reversal and now the gap is surely going to fill.
Now that SPX has pushed down below the fib, the bounce has become an upper wick shakeout reversal and now the gap is surely going to fill.
Comment:
Gap filled. How things continue from here should give a clue. are we now going to see a bounce back above the fib? If yes then 4200 probably on the cards. If not then 3600.
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