S&P 500 IndexShort
S&P500 Possible Reversal Zone
Hey guys,
Kind of new here but I thought I'd throw this up as my first post to see what people thought about situation we're in right now.
From a technical standpoint, the 2600-2700 range looks pretty tough to me for the following reasons:
- Elliot Wave Theory. Four of the five waves that make up an Elliot wave have been completed, it is not unexpected that another should follow soon to continue into the downtrend.
- 20 EMA Touch. The S&P500 is yet to touch the daily 20 EMA since the downtrend began, but I'm sure it will provide some kind of resistance.
- Daily Trend line. This trend line is still fresh and yet to be tested. Although, it should be noted that the trend line is very steep and even if the S&P500 does continue to respect that trend line, it would be surprising for it to keep falling at that rate (~800 points/month) in the future.
- 0.382 Fibonacci Retracement Level . The Fibonacci retracement level 0.382 lines up perfectly with the 2650 zone mentioned before. The 0.382 fib level has provided some level of resistance (not drawn on my chart) in the past, during the second wave of the cycle. Also, wave 2 peaked at a Fib retracement level of 0.5 when drawing the Fib line from the peak of the S&P500 in the middle of February to the low of wave 1. Additionally, when a Fib retracement is then drawn from the peak of Wave 2 to the lowest point on wave 3 (not drawn on my chart at the time), the 0.5 fib level aligns very well with the same 2650 zone.
- Support/Resistance Level. The 2650-2750 level has also shown signs of being a point of support and resistance in the past. This is more evident on smaller time frames (4hr/1hr).
I'm not certain on this level being a reversal zone, but the technicals seem to indicate that this point is very strong, so it should at least provide a fair bit of resistance. I will be looking for chart patterns on lower time frames like double tops or H&S for a safer entry.
It seems like this whole crash is happening in fast forward because of the COVID-19 pandemic. It also doesn't look like the virus is slowing down too much, even with many countries around the world attempting to lockdown.
That's just my thoughts on the market right now. I'm by no means an expert so please don't blindly follow my analysis.
Please let me know what you guys think in the comments as I am always interested in receiving constructive criticism and understanding other people's perspectives.
Cheers
Kind of new here but I thought I'd throw this up as my first post to see what people thought about situation we're in right now.
From a technical standpoint, the 2600-2700 range looks pretty tough to me for the following reasons:
- Elliot Wave Theory. Four of the five waves that make up an Elliot wave have been completed, it is not unexpected that another should follow soon to continue into the downtrend.
- 20 EMA Touch. The S&P500 is yet to touch the daily 20 EMA since the downtrend began, but I'm sure it will provide some kind of resistance.
- Daily Trend line. This trend line is still fresh and yet to be tested. Although, it should be noted that the trend line is very steep and even if the S&P500 does continue to respect that trend line, it would be surprising for it to keep falling at that rate (~800 points/month) in the future.
- 0.382 Fibonacci Retracement Level . The Fibonacci retracement level 0.382 lines up perfectly with the 2650 zone mentioned before. The 0.382 fib level has provided some level of resistance (not drawn on my chart) in the past, during the second wave of the cycle. Also, wave 2 peaked at a Fib retracement level of 0.5 when drawing the Fib line from the peak of the S&P500 in the middle of February to the low of wave 1. Additionally, when a Fib retracement is then drawn from the peak of Wave 2 to the lowest point on wave 3 (not drawn on my chart at the time), the 0.5 fib level aligns very well with the same 2650 zone.
- Support/Resistance Level. The 2650-2750 level has also shown signs of being a point of support and resistance in the past. This is more evident on smaller time frames (4hr/1hr).
I'm not certain on this level being a reversal zone, but the technicals seem to indicate that this point is very strong, so it should at least provide a fair bit of resistance. I will be looking for chart patterns on lower time frames like double tops or H&S for a safer entry.
It seems like this whole crash is happening in fast forward because of the COVID-19 pandemic. It also doesn't look like the virus is slowing down too much, even with many countries around the world attempting to lockdown.
That's just my thoughts on the market right now. I'm by no means an expert so please don't blindly follow my analysis.
Please let me know what you guys think in the comments as I am always interested in receiving constructive criticism and understanding other people's perspectives.
Cheers
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