Fan Yang
1
All posts from Fan Yang
Fan Yang in Fan Yang,

S&P500 - an ABC Correction Scenario

The S&P500 index has been bullish the last week, fueling speculation that bulls are back in control. When we look at the daily chart, we can see that while price action does indicate bullish control, the overall price structure remains that of a consolidation mode. 

S&P500 Daily Chart 10/7
(click to enlarge)

Before we are overly excited about the prospect of a bullish market again, let's first respect the resistance around 2000, which appears to be stalling the current rally. But even if price pops above 2000, there is still a key resistance around 2040, which use to be a key support until it broke in August. 

Let's say price does reach 2040. What we will have is a completed bullish ABC correction during a possibly larger bearish correction mode. If the daily RSI is also around 60 and turns down, then we should really consider the market still in consolidation/bearish correction, and expect decline from that 2040-2050 area.