SPX ABC wave may reach 3400 if it loses 3800; Bulltrap?
SPX rally stalls inside the 4100 to 4200 zone. The recent gap up above the H&S violet neckline could be a bulltrap. If bears gap it down next week below the neckline (island reversal), then the H&S pattern may still play out.
BULLISH CASE: As long as SPX does not make a lower low than 3800. There may be a chance for a double bottom before a new 5-wave rally,
BEARISH CASE: If SPX breaks breaks below 3800, the the possibility of a 5-wave C-wave becomes clearer. This will be the last leg down of the 5-3-5 ABC corrective wave from ATH. Wave C has a high chance of ending in the 3500 to 3400 green zone. 3500 is a 0.50 Fib retracement from pandemic low to ATH. 3400 is a 30% correction from ATH. (The pandemic plunge was a 35% correction)
3400 is also the wave 1 pre-pandemic top. EW theory states that wave 4 should not end lower than the top of wave 1. Since wave2 retraced only 0.382 Fib of wave 1, then wave 4 should be a much bigger correction of at least 0.50/0.618 Fib.
My BULLISH wave 5 Target: if SPX drops to 3400 from lets say 4200, that would be the c-wave. Applying FIB levels to c-wave COINCIDENTALLY will see ALL the impt FIB levels falling exactly on my various S&R lines. The final wave 5 melt-up top may reach my red 5150 to 5435 zone sometime in the middle of 2023. 5312 is a 2.618 Fib of the pandemic crash. 5435 is the 2.618 of my predicted wave dive. And if you measure the most recent range from 4637.30 B-wave top to the 3820 current bottom. Double that 800 range & you will exactly get my predicted 5435 wave 5 melt-up top.
Note: the bullish case assumes that the FED pauses & becomes less hawkish after the priced-in two 50 basis point rate hikes in June & July when consumer demand, inflation & the economy slows down substantially. Before that happens, volatility & fear shall remain & the market continues to be driven by news & sentiment rather than fundamentals.
Not trading advice
BULLISH CASE: As long as SPX does not make a lower low than 3800. There may be a chance for a double bottom before a new 5-wave rally,
BEARISH CASE: If SPX breaks breaks below 3800, the the possibility of a 5-wave C-wave becomes clearer. This will be the last leg down of the 5-3-5 ABC corrective wave from ATH. Wave C has a high chance of ending in the 3500 to 3400 green zone. 3500 is a 0.50 Fib retracement from pandemic low to ATH. 3400 is a 30% correction from ATH. (The pandemic plunge was a 35% correction)
3400 is also the wave 1 pre-pandemic top. EW theory states that wave 4 should not end lower than the top of wave 1. Since wave2 retraced only 0.382 Fib of wave 1, then wave 4 should be a much bigger correction of at least 0.50/0.618 Fib.
My BULLISH wave 5 Target: if SPX drops to 3400 from lets say 4200, that would be the c-wave. Applying FIB levels to c-wave COINCIDENTALLY will see ALL the impt FIB levels falling exactly on my various S&R lines. The final wave 5 melt-up top may reach my red 5150 to 5435 zone sometime in the middle of 2023. 5312 is a 2.618 Fib of the pandemic crash. 5435 is the 2.618 of my predicted wave dive. And if you measure the most recent range from 4637.30 B-wave top to the 3820 current bottom. Double that 800 range & you will exactly get my predicted 5435 wave 5 melt-up top.
Note: the bullish case assumes that the FED pauses & becomes less hawkish after the priced-in two 50 basis point rate hikes in June & July when consumer demand, inflation & the economy slows down substantially. Before that happens, volatility & fear shall remain & the market continues to be driven by news & sentiment rather than fundamentals.
Not trading advice
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