Several technical events that SPX registered this week urged me to work on this long term SPX/ES chart. It’s not optimistic.
This study contains:
– candle charts – analysis of candles and TA;
– long term Elliott Wave projection for SPX.
I’ll keep it short.
The weekly candle flipped the weekly PSAR bearish. RSI moved below 50. If the candle closes tomorrow below the previous week low, the continued path downwards will be confirmed.
There is a threat to make a bearish Engulfing and flip PSAR bearish. If it happens, the index will face at least one month of lower prices.
I charted this bearish path in September 2020 after the first bearish Engulfing that was amazingly canceled in November. Now there is a chance of another Engulfing in January.
Before I explain the analysis, just look at this BTC chart that I forecasted in March 2020 and its current look. Are you seeing a strange resemblance with SP500? They are also very similar from the perspective of indicators.
Possible retrace levels:
- Wave IV typically retraces 0.236-0.382 of wave III. Red rectangle.
$3840-3240, or 20-33% off the top.
- Wave IV usually finds its bottom in the area of wave (4) of a lower degree. Purple rectangle.
$3380-2200, or 30-54% off the top.
- Wave IV normally ends on the lower boundary of the long term channel.
From a few months to several years.
Wave II was obviously a flat and the same shape very rarely repeats in wave IV. The next most probable shapes would be a zigzag or a triangle. The chance of a zigzag is higher at this point as the wave down seems to be shaping as a motive wave.
If the index does not recover by the end of month and does not print a less bearish candle than Engulfing, the chances of a multi-month / multi-year bear market will elevate greatly.
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