I suggest disconnecting from all the rumors. We are not betting on the pools.
A major event is upon us and we don't know if Mr. Bernanke will say more than "we are ready to do whatever is needed".
It is just a personal opinion (so its worthless):
I believe that the major event is not today but next Thursday's ECB meeting.
Yesterday price made a "big statement" by breaking to the down side the tight trading range of the last few days that was suggesting a "holding" pattern. In addition the internal structure if the down leg can be considered impulsive.
Therefore odds are now large that my preferred short-term scenario that was calling for a Zig Zag down off the August 21 high should play out.
If price has kicked off the wave (C) down then we know that price will either unfold an impulsive 5 - wave down leg or an ending diagonal.
Likewise we have:
- A theoretical extension target range at 1385
- A rising trend line support that will stand next Tuesday at 1381; next Wednesday at 1383 and on ECB day at 1385.
- The 0.618 retracement of the up leg off the August 2 higher low at 1382
Regardless of what Mr. Bernanke will say or not say today I know where my scenario is wrong as price must remain below the 20 d MA = 1407 and it cannot waste much time in triggering the third leg down.
Below in the 15 min chart I have my best interpretation of the short-term price action.
So this is what I believe is the most likely short-term scenario, BUT I have a major concern since the EUR has not made a lower low and it is now threatening to break above the previous high.
As a reminder I maintain the idea for SPX that the corrective counter trend move from the June 4 low is not over yet. Therefore once/if the current Zig Zag down is done I expect the launch of the last wave up of the Triple ZZ that will challenge 1426 with a potential target in the 1440 area.
Have a great weekend