Daily Analysis
Today we have to pay close attention to the EUR since we finally got a potential reversal pattern. Price did not reach the 1.3000 pivot resistance zone but it reversed at the Trend Line resistance, leaving a second consecutive daily doji.
It is too early to know if the corrective up leg off the April 16 low is done or if price is only taking a breather, in other words and if my count is correct, we either have the top of a wave (X) or just a segment of it. The former would mean troubles for the equity bulls while the latter it would be ok and probably consistent with 1- 2 days pullback of SPX.
In my opinion the odds of at least some weakness are large. A mild pullback should not breach the 20 d MA = 1.3160
In the 30 min chart below I have a potential ending pattern of the overlapping up leg off the April 16 low.
Price still has to breach the Trend Line support but yesterday's impulsive down leg presage at least a test of the Support 1 = 1.3162
Regarding SPX, yesterday we had a peculiar trading session: bullish during the first half and bearish in the second half. Usually eod weakness does not bode well for the next trading day.
I remain with a bullish bias for the reasons explained in my last 2 posts:
- Market breadth thrust.
- Absence of impulsive decline, which implies that the EWP from the October 4 low is not over yet.
As I mentioned yesterday if the EWP from the October 4 low it is not done it means that price should carry out one more up leg.
This pending wave up has to be impulsive or it has to unfold an ending diagonal.
Given the internal structure of the up leg off the April 23 low it seems that the impulsive option is now less likely, hence I place it on quarentine
Therefore I am now considering two potential EWP:
- Ending Diagonal Option:
- Triangle Option:
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