S&P 500 Testing Critical Fractals after Bounce at 21 EMA

The S&P 500 made a critical break above the 21 ema zone. The bulls are in clear control but can price action break above the critical resistance trend line (orange)?

Let’s review the key decision zones and expected wave patterns on the S&P daily and 4 hour charts.

Price Charts and Technical Analysis

The S&P 500 has made a break, pullback and bounce pattern at the 21 ema zone. Price action must now break above the resistance Fractal for a confirmed bullish continuation (green arrow) within wave 5 (pink). The main targets are at the round 30,000 level and 30,750.

If price action breaks below the 21 ema zone (orange arrow), then the wave 4 (pink) pattern is not completed. In that case, we expect price action to retrace and test the long-term moving averages.

A bullish bounce (blue arrows) at the support zone could confirm an ABC pattern via the wave 4 at a later point (pink 4’). A break below the long-term moving averages, however, would invalidate (red x) the bullis outlook.

On the 4 hour chart, price action must break above the resistance trend lines and fractals (orange line) for a bullish breakout (green arrows) within the wave 5 (purple). A break below the 21 ema zone could trigger a deeper retracement (orange arrows).

A bullish bounce (blue arrows) at the long-term moving averages support zone (blue boxes) could confirm a wave 4 at a later spot (4’ purple). But a break below that zone, however, indicates a bearish ABC (red) correction that could take the price way lower. This could indicate the start of a deeper correction.

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

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