Following our previous analysis on the S&P500 index of listed shares (tradingview.com/chart/SPX500USD/4qOC3jAV-S-P500-Short-Opportunity-within-the-bigger-correction/), we have been monitoring the index closely in its movements as it ultimately broke the weekly high around 2877. What seemed a first attempt to the downside was followed by an identical attempt, marking a running flat pattern (which we have drawn in purple). At which point we knew the index was going to go for another upside swing which would have certainly broke the temporary top of the structure (right after marked "b" of the minor corrective running flat), and could have potentially broken the weekly high, which it did in the last sessions. That however, does not change the fact that the current movement is not part of the monthly uptrend to the upside, but a B wave of a big corrective structure, which will have to complete itself with a C wave to the downside. It is this movement that we are still expecting any moment now, that represents our key profit opportunity and will take the price most probably towards the 2680 area, more or less.
After, the index will go for another upside movement, but we believe the correction will most probably not be over as yet and the index will have more up and downs before resuming the main monthly uptrend. But that is many months ahead and what is important now, really, is the completion of the C wave of the current corrective structure and the relative short opportunities that come with it. From this moment on again, we will be looking for sell setups on this index. Updates on minor timeframes will follow.
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As the downside we are expecting could already have commenced and as per our analysis above, we will be taking each and every sell setup from now on. Watch for a first impulse to the downside to complete itself, wait for it to correct with a small 60min flag, and sell the break of said correction with a stop loss above it:
Trade with care and only with a backtested strategy that has proven to work in relation to your invested capital, risk appetite and potential small losses you might incur in before profiting from a good trade.
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Watch it carefully now. It seems like it will make another high but this is possibly the last one for real now. Look for sell setups or put sell orders on the break of the last minor trends:
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After several new highs on the smaller timeframes, seems like we found the completion of our B wave:
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Seeing the microstructure in the 60min chart, there is a chance for one more up to slightly break the top one last time before the fall. We have circled the corrective pattern in the making to clarify. Please note that there is divergence on all timeframes, so an expected deep move on the daily timeframe is bound to happen anytime now.
@lapin_eliott, possibly yes ! we are so lucky that our broker did not take us out on BE at 2912!
lapin_eliott
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@TradingClear, and now the big question is if all of this is just the normal reaction to the structure you identified weeks ago or if it will obey impulsively the bond market crash, in that case the move shall be far deeper and crash-like than what you thought initialy
TradingClear
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@lapin_eliott, Dow Jones and Nasdaq will tell us. The market could at the moment "just" be adjusting to the potential that rates moving upwards eventually has repercussions on the real economy. Having said that, even if the indexes go back up, they will still come back down again, for a bigger move - what I want to say is that we will probably be in a wider range for some time. Nonetheless, these are great trading opportunities.
lapin_eliott
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@TradingClear, do you believe in this test of 3000 for SP500 ?
what target do you see for the DJI that would correspond to the 2680 target of SPX ?
TradingClear
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@lapin_eliott, Hello we don't trade the DJI because our broker only deals the SP, Nasdaq and Wall St. 30, therefore we don't analyse it. Having said that, and looking at the chart, the pattern it is forming, if the drop has commenced, looks very much like a running flat. In this case the target one could expect would be in the 25700 area, app. Bear in mind that, in the 4hr chart, we could also be in an expanding flat for one more upside, before the drop (just like the S&P). Not certainly, but maybe. Hope this helps,
lapin_eliott
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lol, a comment on your last comment ? do you see still another attempt to break the top or are you confident we got our initial impulse ?
TradingClear
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@lapin_eliott, keeping both options open, at the moment. We had a stop sell order at 2912 but we are keeping it in break even from now on. If it spikes back up, we'll let it close in BE and wait for the next sell. If it corrects for more downside instead, it's the beginning of the C wave. Best,