S&P is testing its long term trend and the bullish wave scenarios. I always say that corrections are welcomed and a healthy market does not always move up or down. It must move in cycles in order for buying and selling powers to recharge. From the weekly chart I have support at the 55 EMA and the potential previous wave 1 top. These levels should at least give the index a good bounce of at least 38% retracement from last important high (1415).
The hourly chart confirms the downtrend in force, but also the fact that it is oversold and a bounce is imminent. The whole move from 1415 could be a 5 wave down as part of an impulsive wave or the last part of a wave C correction. There is a smaller chance that from 1415 we have 3 waves down and that we should expect a 4th and a 5th. This is more bearish as it will penetrate the longer term supports invalidating longer term wave counts. A move above 1350-60 could prove as an early sign of the longer term bullish trend resuming. Confirmation would be above 1415.
In shorter time frames we confirm once more that a downward trend is in force. Previous short term highs at 1300 and 1308-9 should be broken if a bounce is to give a 4th wave or the end of this decline from 1415. The lower lows and lower highs will in my opinion be interrupted this week. A failure to do so will not only strengthen bearish short term trend but also the possibility of a longer term trend change as important as March of 2009.
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