View: SPX: Follow Up of the Short Term EWP | The wave trading

SPX: Follow Up of the Short Term EWP | The wave trading

SPX: FOLLOW UP OF THE SHORT TERM EWP

Content added from thewavetrading.com/2012/10...21/#more-3554

Another brief update

I have already discussed my reasons why I consider the downward price action from the September 14 high incomplete.

Basically I expect at least a Zig Zag = (ABC)

If this scenario is correct then price has to be involved in the late stages of the wave (B).

The irrefutable fact that the current bounce from the September 26 low at 1430.55 is overlapping gives to me a huge confidence that the next directional move is going to be to the down side.

The issue remains to wait for a terminal pattern.

Yesterday I thought we had one but the Leading Diagonal option, judging from today´s rise of ES Globex, is dead.

On the upside we have three levels to watch for the expected exhaustion:

Trend line resistance (From Sep. 14 high) 1457.14 1467.07

While the support is at the 10 & 20 d MA = 1448

Regarding the short-term price action, since the LD bearish set up has been aborted, and the move from the September 26 lod can only be considered corrective, in my opinion, price should be involved in unfolding a TZZ with an extension target at 1462.

Obviously, my short-term bearish scenario has to be validated by a reversal of the EUR, which during the week has been lagging behind the equity bounce.

Here the set up would be similar, with a potential Zig Zag down from the September 17 high.

We have to see if price is able ot not to recover above 1.3000

In the technical front we have mixed short term signals

We have negative divergence of the NYSE Adv-Dec Volume

While there is absence of negative divergence in the RSI (here we have to watch the 2 trend lines resistance) and in addition we have a new bullish cross of the Stochastic.