The Bulls Strike Back

Elliott wave “fours” in standard impulse waves are normally shallow usually retracing a Fibonacci .382 of the third wave, or .382 of the movement from the start of wave “one” to the end of wave “three”.  The reason for shallow retracements  is  that at whatever time scale, a change of trend is  perceived, and counter trend moves usually do not make much progress.

The 30- minute  S&P 500 (SPX) chart courtesy of Trading View illustrates the recent action.

The move down from 01/04/22 to 01/24/22 was steep with only one significant counter trend move and appears at least in the short-term to be a trend change to the downside.  

Prior blogs have noted that the 01/26/22 SPX high was just above a .382 of the drop from 01/04/22 – a logical place for the termination of the counter trend move.

The 01/30/22 blog noted that SPX  4500.00 could be resistance.  This  level was where the supposed minute wave “iv” would be 1.618 times the supposed minute wave “ii.”  The bulls eye level is 4489.00 with an 11-point leeway. 

Today 01/31/22 the SPX exceeded both the 01/26/22 high and the 4500.00 level.

The next important resistance is at 4582.24.  In standard impulses waves  the fourth wave cannot  travel into the price area of wave “one.”  The wave “one” bottom is 4582.24.  If the SPX  reaches  this level it would imply  that the drop from 01/04/22 to 01/24/22 was a  correction within an ongoing  bull market.   

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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