Since the COVID rebound (www.tradingview.com/...-bullish-divergence/) price has lived in a ascending channel testing the upper bounds until over-extending and surpassing current all time highs.
Price has now rejected the upper bound of the channel, passing the middle and is coming close to the bottom.
Looking at the ichimoku indicator we can see the tenkan-sen (Conversion line) is about to pass the kijun-sen (Base line) which implies a bearish reversal - Reference the purple box.
This is backed up by also a passing between the MA's on the Stoch RSI - Reference red box.
On a fundamental standpoint, we know that a stimulus package is looking unlikely to be passed, leaving many Americans with less cash flow and therefore less cash invested in the market/funds needed to be took out of the market.
We are also at a time were the market has continued to over-extend to unmanageable figures (Review most stock P/E ratios currently) given we are still in the mist (arguably the beginning in my eyes) of a recession.
Interest rates continue to be at an all time high, nearing a point were they can no longer go lower to assist the market and allow more leveraging.
Not to mention we are only weeks away from an Election which could have large implications to the market in the forms of new policies/taxation at a time were it could cause greater repercussions.
I do not plan to enter until price has confidently closed into the lower bounds of the channel, near the ~3396 level. I plan to exit the trade once price hits near the 0.786 fib/kumo cloud areas near 3134.4.
This should provide a ~262 point trade.
For reference similar assets to compare this analysis on based on there correlation % are:
EURJPY (80% Correlation over the past 3 months to SPX500)
ETHUSD (79% Correlation over the past 3 months to SPX500)
An the inverse is true for the following:
USDCAD (-85% Correlation over the past 3 months to SPX500)
USDCHF (-72% Correlation over the past 3 months to SPX500)
Price has now rejected the upper bound of the channel, passing the middle and is coming close to the bottom.
Looking at the ichimoku indicator we can see the tenkan-sen (Conversion line) is about to pass the kijun-sen (Base line) which implies a bearish reversal - Reference the purple box.
This is backed up by also a passing between the MA's on the Stoch RSI - Reference red box.
On a fundamental standpoint, we know that a stimulus package is looking unlikely to be passed, leaving many Americans with less cash flow and therefore less cash invested in the market/funds needed to be took out of the market.
We are also at a time were the market has continued to over-extend to unmanageable figures (Review most stock P/E ratios currently) given we are still in the mist (arguably the beginning in my eyes) of a recession.
Interest rates continue to be at an all time high, nearing a point were they can no longer go lower to assist the market and allow more leveraging.
Not to mention we are only weeks away from an Election which could have large implications to the market in the forms of new policies/taxation at a time were it could cause greater repercussions.
I do not plan to enter until price has confidently closed into the lower bounds of the channel, near the ~3396 level. I plan to exit the trade once price hits near the 0.786 fib/kumo cloud areas near 3134.4.
This should provide a ~262 point trade.
For reference similar assets to compare this analysis on based on there correlation % are:
EURJPY (80% Correlation over the past 3 months to SPX500)
ETHUSD (79% Correlation over the past 3 months to SPX500)
An the inverse is true for the following:
USDCAD (-85% Correlation over the past 3 months to SPX500)
USDCHF (-72% Correlation over the past 3 months to SPX500)
