S&P completed yesterday the 5 wave downward move from 1687. The downward move is a text-book downward wave. This can be seen in the following chart. We can now expect prices to bounce towards 50-61.8% Fibonacci retracement levels.
The upward bounce has started after yesterday’s open. As shown above, the upward price reaction has an overlapping pattern. This confirms our view that this upward move is corrective. Corrections usually move towards the 50%-61,8% retracements. So that levels could prove strong resistance levels and where sellers could start to put pressures again on the index.
Our view remains bearish and we expect to see at least one other leg down towards 1620. After the upward correction is over, we believe selling pressures will push the index towards 1620. The upward correction is most probably going to end near 1660 where not only the 50% retracements is ,but also the middle Keltner channel resistance.
On the daily chart our view of a fourth wave decline is still our main scenario. If price movements continue to push downward in an impulsive form, we will recalculate our downward targets. Until then, we expect prices to reach 1600-20 area.
As always, thank you for taking the time to read my new post.