The 03/31/22 blog noted that the S&P 500 (SPX) low on 03/31/22 was just above the Fibonacci .236 retracement of the rally from 03/14/22 to 03/29/22. The next day the SPX broke below the .236 support level yet failed to reach the .382 support zone.
The 5 – minute SPX chart courtesy of Trading View updates the price action.
The decline since the 03/29/22 peak appears to be an extended five wave Elliott Impulse pattern. After the bottom on 04/01/22 the subsequent rally was larger and longer than any rally during the 03/29/22 to 04/01/22 drop. The impulsive look of the drop after 03/29/22 and the size of the late 04/01/22 rally strongly imply that either Minor wave “A” or “1” bottomed on 04/01/22.
The late 04/01/22 rally into the close had the clear three wave structure of a Single Zigzag correction. Its possible the rally is complete as of the close on 04/01/22. If the rally continues, the 30 – second SPX500 – Point & Figure (PF) chart reveals areas of potential resistance.
Trading View has an index called SPX500 its symbol is also SPX500. This index is like a continuous S&P 500 futures chart yet its priced at almost the same level as the SPX. The SPX500 can sometimes be helpful in detecting support and resistance levels especially when using a PF chart.
On 04/01/22 the SPX500 late day rally peaked just below a PF price cluster, just above this cluster is the .382 retracement level. If on 04/04/22 the SPX500 pushes above the .382 level there is no significant chart resistance until the .618 retracement level. Note that this level is close to a double top made on 03/31/22. Just above the double top is a PF price cluster.
The rally since the SPX 03/14/22 bottom has been strong and steady – the bulls are eager to buy. Its logical to expect that the rally after the 03/29/22 to 04/01/22 decline could also be strong. If there’s more upside action after the SPX 04/04/22 open, the area around SPX 4590 is the most likely resistance zone to halt the rally.
Factors that imply the SPX decline from 03/29/22 are not complete.
- Impulsive look of the 03/29/22 to 04/01/22 drop. Declining impulse waves are usually the first phase of continuing downside action.
- The bottom made on 04/01/22 was not at a Fibonacci support level which leaves open the possibility for a drop to the next Fibonacci support near SPX 4455.
If in the next few trading days there’s a drop into the 4455 area, it could present an opportunity to establish long positions.