S&P 500 made a critical break above the 21 ema zone. The bulls are in clear control but can price action break above the critical resistance trend line (orange)?
S&P 500 has made a break, pullback and bounce pattern at the 21 ema zone. Price action must now break above the resistance Fractal for a bullish continuation.
A break below the long-term moving averages, however, would invalidate (red x) the bullis outlook.
Let’s review the key decision zones and expected wave patterns on the S&P daily and 4 hour charts.
Price Charts and Technical Analysis
The S&P 500 has made a break, pullback and bounce pattern at the 21 ema zone. Price action must now break above the resistance Fractal for a confirmed bullish continuation (green arrow) within wave 5 (pink). The main targets are at the round 30,000 level and 30,750.
If price action breaks below the 21 ema zone (orange arrow), then the wave 4 (pink) pattern is not completed. In that case, we expect price action to retrace and test the long-term moving averages.
A bullish bounce (blue arrows) at the support zone could confirm an ABC pattern via the wave 4 at a later point (pink 4′). A break below the long-term moving averages, however, would invalidate (red x) the bullis outlook.
On the 4 hour chart, price action must break above the resistance trend lines and fractals (orange line) for a bullish breakout (green arrows) within the wave 5 (purple). A break below the 21 ema zone could trigger a deeper retracement (orange arrows).
A bullish bounce (blue arrows) at the long-term moving averages support zone (blue boxes) could confirm a wave 4 at a later spot (4′ purple). But a break below that zone, however, indicates a bearish ABC (red) correction that could take the price way lower. This could indicate the start of a deeper correction.
