SPX refuses to confirm 4 consecutive toppish candlesticks.
With light volume and most of the daily rise done during the pre-market, probably the price action is mainly due to short squeezes and buying time for this week huge event.
As we are approaching the critical events, ECB & EC summit meetings next Thursday and Friday, the odds of a "large" pullback are decreasing. Instead of a price correction it seams that we are witnessing a sideways time correction, then most likely today is probably the last chance for some selling.
I am more concerned on the EW structure of this move more than anything else since the "future" of this rally will depend upon if this move is an impulse up or a corrective up leg. The reason has been already discussed (the ZigZag needs an impulsive wave (C) while if corrective it could be suggesting a Triangle).
The short-term SPX key levels are:
- Above: the 200 dsma = 1264 then 1277.55
- Below: the 3dsma = 1253 then the 10dsma = 1232
Although it may seem a contradiction the bullish Zig Zag scenario could be strengthened with a measured pullback instead of price creeping higher.
Short Term Price Action - Elliot Wave Pattern:
Yesterday SPX choppy action may have left by eod a potential reversal pattern if today price confirms a potential Double Top by breaching the 1250 horizontal support.
If confirmed the DT has a target at 1233, where we also have the 10 dsma. If lower then the next target is at the .382 retracement = 1225
If instead price moves higher then the impulsive structure could be jeopardized.
The EUR remains a concern since it is not showing the same exuberance of the equity & EU bond spreads moves.
I have already discussed that EUR is not rising with am impulsive structure but a potential wave (B) could carry price towards a target range = 1.3695 -1.3950 if the 50dsma = 1.3605 is transformed into support.
For the short term I am working with an initial Zig Zag with a pending wave (C) up.
