S&P500: Longer Term Uptrend Intact

Technicals | Oct 30 2020

Bottom Line 29/10/20

Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Up
Support Levels: 3200 / 2950 – 2800
Resistance Levels: 3589 (all time highs)

Technical Discussion

Reasons to remain longer term bullish:
→ Elliott Wave count continues to have motive bigger picture
→ Support / resistance zone 2950 – 2800 continues to hold strong
→ higher degree Wave-[4] may still require further coiling yet immediately bullish count remains preferred

‘…. since then price has traded down to 3419 with no significant reaction from buyers coming into play just yet. So this means, at least more immediately, that price action is remaining a little weak. So some further testing of strength around the old major support / resistance zone circa 3400 may still be required over the coming days.’

Last [Wednesday] night we were hit with a negative session. The price bar was wide ranging, closing on its lows, and on above average volume. Combined with the session starting off with a gap open south ! Not a great look ! If price shrugs this off tonight [last night] and we reverse immediately from here, then this will keep our preferred wave count on track. With a wave-iii of (iii) of 3 potentially the next stage we will witness which is exceptionally bullish. [Wednesday] night’s clean out move was strong though, so we do need to proceed with an element of caution right here and now.

The move also keeps the door open for our alternate count to play out which is the one we have annotated in red on our chart. This is still looking for the larger (A)-(B)-(C) move to continue evolving which began back in February this year. It still requires further depth though if this is the way the dice rolls. With the support zone circa 2950 – 2800 remaining in focus. Lots going on at the moment with the upcoming U.S elections, combined with Covid-19 concerns. On top of it being reporting season in the U.S. Hold onto your hats as its going to be a very telling next couple of weeks !

Trading Strategy

Our formal recommendation to trade long at 3432 with stops placed at 3305 was exited last night with our stop being hit. It was certainly a negative session as stated with price needing to immediately reverse tonight if our preferred black annotation  is to play out. Being secular bullish on U.S markets we will continue to look for opportunities on the long side. Yet for now being back on the sidelines is the only place to be until clarity can return. Especially within the short to medium term time frames.

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