Wyckoff Method Reveals Where The Stock Market Could Head To

Since more than a month ago, a silver lining for the looming stock market crash has been discussed followed by the analysis using the market breadth indicator to anticipate the next big move as explained in the video at the bottom of this post, S&P 500 finally broke above the trading range between 3740-3950.

Using Wyckoff Trading Method To Establish The Market Context

Despite the bearish sentiment together with the bad economic data, S&P 500 did not break the low formed in June 2022, as shown in the chart below.

After the selling climax (annotated as SC) in May followed by an automatic rally (AR) tested the axis zone around 4200 where the support-turned-resistance, S&P 500 had the sharpest reaction reacting the CPI data in June after broke below the support at 4100. A lower low was formed in S&P 500 at 3639. A range bound condition between 3639-4200 has been created for S&P 500.

The extreme bearish sentiment together with the oversold condition with accumulation on the way down was spotted and a bullish scenario was discussed in this video to anticipate a relief rally off the low.

The subsequent pullbacks at the end of June and July formed a higher low with decreasing of the volume suggested the supply has been exhausted.

Although S&P 500 had a volatile day reacting the bearish CPI data on 13 July 2022, the result to the downside was minimal. This was one of the tell-tale signs to prepare for a bullish move as the market shrug off the bad economic data.

Within the trading range between 3750-3950, demand near the support zone 3750-3800 was observed suggested the presence of value buying.

On 19 July 2022 S&P 500 broke out from the downtrend channel started in early April followed by a commitment above 3950 on 20 July 2022. This painted a bullish condition for S&P 500 to rally to the upper resistance 4200 of the trading range.

S&P 500 Price Prediction Using Point & Figure Chart

Since accumulation characteristics in the trading range between 3639-4200 were spotted, price target projection using Point & Figure chart with the adoption of the Wyckoff method was conducted, as shown below.

Using only the first segment (as highlighted in blue), the first price target for S&P 500 is 4160, which is within the previous resistance zone 4100-4200. This is the first logical zone to attract supply hence a pullback can be expected in S&P 500.

Should a shallow pullback (instead of a test of the swing low near 3700) happen in S&P 500, continuation to the upside to break above 4200 can be expected.

Based on the adoption of the two segments (as highlighted in orange and blue), there is enough fuel in the tank for S&P 500 to rally to 4710, which is very close to the all-time-high level. Detail analysis is needed only when the first resistance zone between 4100-4200 is overcome.

Using Market Breadth Indicator To Look For The Next Big Move in S&P 500

As mentioned earlier, watch the video below to find out how to adopt the market breadth indicator and the Wyckoff trading method to spot the bullish tell-tale signs to anticipate the next big move in S&P 500.

Despite the short-term market direction is up, this is still a bear rally hence volatility is expected to be high. Tight risk management is needed when trading the outperforming stocks. Visit TradePrecise.com to get more stock market insights in email for free.