As forecasted in the previous weekly, this week SPX, NDX and DJIA took a pause. Let’s explore the candles, indicators and EW and forecast the movements for the next week.
As expected, after moving outside of BB, indices printed this week candles side-by-side. While all 3 candles look somewhat bearish, their position and the indicators do not support a reversal yet. The chance of moving horizontally is higher than anything else.
The daily candles formed various bullish reversal formations. Note that the price for all three indices closed above 8 EMA. There is a very good chance that the rally continues the next week.
SPX/ES retraced 0.236 of the recent rally, the necessary minimum for wave 4, and possibly started wave 5.
Currently I am tracking three possible paths as shown on the chart above:
- Green (primary).
Wave 4 completed. Target for wave 5 – $4770-4810. Green rectangle.
This is well aligned with the SPX swing alert on October 18 for target – $4750-4800.
The green scenario seems to be supported by $VIX:
Wave (1) completed. A bigger pullback to $4450-4600 in wave (2). Red rectangle.
The correction that started in September is not over. Possible wave C, targeting $4250-4300.
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