Today we have quarterly OPEX and the always-important weekly candlestick.
Yesterday I mentioned that in order to have a bullish hammer price has to recover the 1230 area.
The current weekly low is located at an important horizontal support that should allow a rally attempt. If today it is breached then the next support is at the 100 w = 1204
I don't want to bore you everyday with the same arguments that in my opinion are suggesting that the wave pattern from the October 4 low is not over.
- Only as a reminder I have a bullish bias because of the corrective wave structure of the November's down leg.
- And I have been suggesting 2 potential EW pattern: Zig Zag or a Triangle.
- And when price breached 1215 I became sceptical with the ZigZag option.
I am monitoring with concern daily momentum indicators, above all the MACD, which is dangerously approaching the zero line.
And the more sensitive McClellan oscillator, which has not breached the oversold 60 line (No panic selling). Here as long as it does not recover the zero line the s/t trend should remain down.
Yesterday SPX ended with an inside day candlestick in addition it is an Inverted Hammer. This type of candlestick suggests that price is attempting to unfold a rebound attempt.
The expected rebound can morph into something stronger if it achieves an eod print above the 20 d = 1221 while an eod print above the 10 d = 1230 will have strong bullish connotations (keep in mind the weekly hammer).
Below yesterday's lod, which at the moment I have labelled (?) we have a gap at 1195.19 that could be filled (Keep in mind the 100w = 1204)
Also yesterday eod print above the BB of CPCE is strengthening the probability of a rebound attempt.
For the shorter time frame the corrective structure of the current pullback is getting annoying since even though it means bullish ahead, there are several ways to label it hence having confidence of the correct s/t outcome is not easy.
I have slightly modified my s/t map:
It is possible that price is still missing a fifth wave in order to complete a Zig Zag from the nominal high.
This scenario is valid as long as price does not overlap above 1227.25
If price, without a lower low breaks to the upside above 1227.25 then I am afraid that a lower low will be needed next week before a tradable bottom is in place. Maybe this option is less likely.
Regarding the overall EW structure, as long as the up legs remain correctives then the option of the Triangle should be considered as the correct pattern.
Have a great weekend.