S&P500 Is it approaching the end of this Cycle?

The S&P500 index (SPX) has been trading within a Bullish Megaphone pattern since the October 2022 bottom of the Inflation Crisis. Since the July 2024 High, it also entered a shorter term Megaphone and those two patterns resemble the 2016 - 2019 Megaphones that emerged straight after the 2015 E.U. crisis and China's slowdown.

As you can see, the 1W RSI sequences among the two fractals are also very similar and the Cycles seem to be repeated with the 1W MA50 (blue trend-line) acting as the Support in times of aggressive uptrends, while the 1W MA200 (orange trend-line) acting as the Support of the Bear Cycles/ correction phases.

The former Megaphone peaked in early 2020 on its 1.618 Fibonacci extension. On the current pattern that Fib is at 7100 and may very well get hit by the end of this year. If it does, the probabilities of a strong technical correction towards the 1W MA200 and the bottom of the long-term Bullish Megaphone, rise dramatically. Especially if at the same time, the 1W RSI turns overbought well above the 70.00 barrier.

It is also worth noting that 1W RSI levels below 35.00 are a strong technical Buy Signal. Long-term investors may seek to use this as a complimentary indicator in case this sharp correction materializes.

So do you think SPX will start correcting if it hits that level by early next year?

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