Today, since I don't have much to add new from what I have been posting in the last few days, I prefer to summarize my view regarding my preferred scenario, leaving the details for the weekend update.
I maintain, depending upon the time frame, the following bias for SPX:
- Long-Term: I am bearish because my preferred count calls for a Double ZZ from the 2000 Top, and now we are in the wave (X) up that will be followed by the second ZZ down.
- Intermediate-Term: I am bullish because my preferred count assumes that the wave (X) is not completed yet.
- Short-Term: I am bearish because, in my opinion, on April 2 price has established a short-term top.
The internal structure, of the current pullback is clearly corrective, but most likely not over.
We have to be "astute" since price is giving us a major statement, as the pattern so far does not suggest extremely bearish implications.
But we have a problem in order to have a confident location of price within the EWP. Since corrective patterns can morph easily.
For the time being I am assuming that price is now involved in tracing either the wave (C) of a larger Zig Zag, which would imply the resumption of more down side shortly (once a relief bounce is completed), or a more complex Double ZZ, which implies a larger rebound.
I am considering the 50 d MA = 1386 as the line in the sand between this two options. Given the weakness seen so far it seems more likely the wave (2) option with a target in the range 1375-1378.
Regarding the potential target, in the weekly chart below I have highlighted the range 1300-1285.
We can also see that the 1340 area is the last obstacle that bears have to break in order to kick off the expected move towards the target box.
- Immediate-Term: I am bullish because:
Short-term momentum indicators are oversold and CPCE is extremely high.
And the EUR is also oversold. Like for the SPX's short-term scenario I expect more down side for this pair but after a relief bounce. The Gap at 1.3089 should not be closed if the EWP that I am following is the correct one.
To sum up:
- I expect a relief bounce due to oversold readings and excessive bearish sentiment (measured by CPCE which is a useful contrarian short term indicator).
- Once the relief bounce is over I am expecting more down side, which will be confirmed by the loss of the 1343 pivot support area.
- The overall pattern suggests that price is involved in a correction with a potential target in the range 1300-1285. Once it is over, it will reopen the door for the resumption of the intermediate up trend.
Have a great weekend.