S&P 500 Creating Bounce Within ABCDE Pattern of Wave 4

The S&P 500 showed a bullish daily candle yesterday. This occurred after a Doji candle appeared at the previous bottom and 144 ema close.

This article why a bullish bounce is expected. But it will also review the potential for a larger ABCDE triangle (orange).

Price Charts and Technical Analysis

The S&P 500 is either completing an ABC or ABCDE. This depends on how price action responds to the resistance trend line. A bearish bounce confirms the wave D and E (orange).

The ABCDE could be a triangle pattern within a corrective wave 4 (purple). Price action completed a strong push up within wave 3 (purple). The wave 4 is only invalidated if price action remains above the 50% Fibonacci level.

The triangle pattern remains valid as long as the tops and bottoms are not broken. Once wave E is completed, price action is expected to bounce at support and break above resistance.

On the 4 hour chart, price action is testing the resistance (purple lines). Bullish breakouts could confirm (green checks) the uptrend whereas a break below the bottom invalidates the bullish bounce (red x).

The bullish breakouts would confirm the end of wave 5 (pink) and wave C (orange). A deeper retracement remains possible (red arrow) but the support zone (blue box) remains likely (blue arrow).

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.