My analysis today deals with how the further course of our most popular stock index "S&P500" could look like.
The DXY / USD has a non-negligible impact on the S&P500, as the whole economy depends on its behavior.
> Meanwhile, this seems to take run-up, for a final upswing, which could bring the S&P500 under massive selling pressure.
> Regardless of this selling pressure coming from the USD, a divergence has formed on the MACD + RSI indicators in the S&P500 weekly chart, forecasting a rising S&P500 / falling USD.
Below, the analysis goes into detail so that you are aware of the significant levels and areas.
For this I have carried out a "MULTI-TIME-FRAME" analysis, which refers to the higher time units (month & week) and thus makes the big picture visible.
Normally, all time units below "1h" are called noise, but even a - 1h-4h - analysis is of no use to you, if the knowledge about the big and whole is missing.
> We traders know that nobody can predict the future, and that's exactly why you have to be prepared for all initial situations.
> If the DXY should rise again, it means "BLOOD" for the traditional and crypto markets.
> This creates dangers, but also opportunities - it is important to look at the big picture.
> I have explained in detail which levels are RELEVANT in the following pages..
Table of contents
1st part = INTRODUCTION
2nd part = TECHNICAL ANALYSIS
= Monthly - Time frame
= Weekly - Time frame
3rd part = CONCLUSION
PART ONE
"INTRODUCTION"
After the "S&P500/USD" formed a top at last year's turn of the year, a strong sell-off is subsequently unleashed.
> This sell-off paused in October|2022 to test the strength of it.
> The two following bullish monthly candles, were interrupted with a "bearish engulfing", - this adds further selling pressure to the index.
> That we can expect a price explosion, thus moves further into the distance - however, this is not excluded, for the following reason:
= The weeks MACD + RSI, show since October last year, a bullish divergence.
> Once you look at the DXY (USD index) on the higher time levels, the further sell-off in the traditional markets, however, becomes more likely.
(My DXY analysis is linked below this post, for confirmation purposes.)
SECOND PART
TECHNICAL ANALYSIS
For the analysis of the higher time levels I proceed according to the onion-skin principle.
> MONTHLY - Level > WEEKLY - Level > DAILY - Level
These are divided into
> SUMMARY > CHARTS
The charts and fibs are presented in logarithmic scaling, as the given information can be visually presented in a more harmonious way.
1. MONTHLY – TIME FRAME
SUMMARY
The trend channel shown in the chart formed in March|2009 and has since been able to take a stand as a legitimate trend channel. Its mid-trend line showed reactions when confronted and was respected by the market.
> The price is in the area below the middle line and had recently touched it.
> In the last 3 months, the price ran up to the middle line, but was not strong enough.
> The trend arc is another support, which should be considered for a future sell-off.
> The downtrend line, was respected and needs to be broken + tested before a "rally".
If we go into more detail about the "SUPPLY & DEMAND" zones, you can look at two "DEMAND" zones on the chart.
> The "DEMAND" zone 1, is WEAK, because it is a RBR (Rally-Base-Rally) and was already tested by the course in October.
> The "DEMAND" zone 2, is VERY STRONG, because it is a DBR (Drop-Base-Rally) and has not been tested by the price yet.
The Fibonacci retracements should serve us as additional confirmation and were taken into account in past movements (last decades).
> Should the price fall further, FIB 1 (0.88 FIB) will serve as resistance. Although due to the previous testing of the 0.786 FIB, the resistance will be crumbling.
> If the sell-off continues, FIB 2 (1.618s FIB) will be the first point of contact for the price and in combination with the arc, can trigger a reaction on the "smaller" time levels.
> The FIB 3 = 0.618 - 0.88 FIB level, in combination with the FIB 4, will trigger the biggest resistance reaction in the market, should such a strong sell-off occur.
The past highs and lows usually serve as resistance / support, one of which we have.
> HIGH | 02/20 - Already showed reactions = Future support
A level of interest is before us, which since 2018, plays a strong role for the market.
> This support, represents the drawn - POI (2,950 USD), which at the time of this analysis, is still far from the price.
CHARTS
S&P500 – Overall picture
S&P500 – Overall picture without trendlines
ATTENTION
In the following time levels, I will only deal with the NEW, added elements.
2. WEEKLY – TIMEFRAME
SUMMARY
Besides the already mentioned trend channel, further trend lines become visible in this one.
- These have caused reactions in the channel in the past and should therefore be kept in mind. (gray)
The monthly "SUPPLY & DEMAND" zones are joined by others from the weekly view that coincide with other resistance / support elements.
- The near "DEMAND" zone has low significance as it has already been tested once by the price.
As other Fibonacci additions, we have two more elements:
> Both newly drawn elements refer to a possible upward movement.
> If there is an upward movement of fundamental magnitude, these levels will be updated again.
CHARTS
S&P500 – Overall picture
S&P500 – Overall picture without trendlines
THIRD PART
CONCLUSION
"The calm before the storm "
Before a thunderstorm breaks out, it suddenly becomes very quiet - currently it is unusually STILL | seen from a macro- and microeconomic perspective.
> Will the calm be broken by a sharp sell-off, or by a price explosion?
In summary, based on technical analysis, there are strong reasons for a falling S&P500 price.
> Since the price top in Jan|2022 - every monthly - Bullish candle, was completely Bearish engulfed.
= Which leads us to conclude a very strong sell-off.
> The divergence on the weekly level, which indicates a price upswing, should be kept in mind - but this is not a reliable indication.
For this reason, I am assuming a weak S&P500 and an accompanying bloodbath in the traditional and crypto markets.
> Positioning after confirmation of this thesis = SHORT
If this idea and explanation has added value to you, I would be very happy to receive a review of the idea.
Thank you and happy trading!
The DXY / USD has a non-negligible impact on the S&P500, as the whole economy depends on its behavior.
> Meanwhile, this seems to take run-up, for a final upswing, which could bring the S&P500 under massive selling pressure.
> Regardless of this selling pressure coming from the USD, a divergence has formed on the MACD + RSI indicators in the S&P500 weekly chart, forecasting a rising S&P500 / falling USD.
Below, the analysis goes into detail so that you are aware of the significant levels and areas.
For this I have carried out a "MULTI-TIME-FRAME" analysis, which refers to the higher time units (month & week) and thus makes the big picture visible.
Normally, all time units below "1h" are called noise, but even a - 1h-4h - analysis is of no use to you, if the knowledge about the big and whole is missing.
> We traders know that nobody can predict the future, and that's exactly why you have to be prepared for all initial situations.
> If the DXY should rise again, it means "BLOOD" for the traditional and crypto markets.
> This creates dangers, but also opportunities - it is important to look at the big picture.
> I have explained in detail which levels are RELEVANT in the following pages..
Table of contents
1st part = INTRODUCTION
2nd part = TECHNICAL ANALYSIS
= Monthly - Time frame
= Weekly - Time frame
3rd part = CONCLUSION
PART ONE
"INTRODUCTION"
After the "S&P500/USD" formed a top at last year's turn of the year, a strong sell-off is subsequently unleashed.
> This sell-off paused in October|2022 to test the strength of it.
> The two following bullish monthly candles, were interrupted with a "bearish engulfing", - this adds further selling pressure to the index.
> That we can expect a price explosion, thus moves further into the distance - however, this is not excluded, for the following reason:
= The weeks MACD + RSI, show since October last year, a bullish divergence.
> Once you look at the DXY (USD index) on the higher time levels, the further sell-off in the traditional markets, however, becomes more likely.
(My DXY analysis is linked below this post, for confirmation purposes.)
SECOND PART
TECHNICAL ANALYSIS
For the analysis of the higher time levels I proceed according to the onion-skin principle.
> MONTHLY - Level > WEEKLY - Level > DAILY - Level
These are divided into
> SUMMARY > CHARTS
The charts and fibs are presented in logarithmic scaling, as the given information can be visually presented in a more harmonious way.
1. MONTHLY – TIME FRAME
SUMMARY
The trend channel shown in the chart formed in March|2009 and has since been able to take a stand as a legitimate trend channel. Its mid-trend line showed reactions when confronted and was respected by the market.
> The price is in the area below the middle line and had recently touched it.
> In the last 3 months, the price ran up to the middle line, but was not strong enough.
> The trend arc is another support, which should be considered for a future sell-off.
> The downtrend line, was respected and needs to be broken + tested before a "rally".
If we go into more detail about the "SUPPLY & DEMAND" zones, you can look at two "DEMAND" zones on the chart.
> The "DEMAND" zone 1, is WEAK, because it is a RBR (Rally-Base-Rally) and was already tested by the course in October.
> The "DEMAND" zone 2, is VERY STRONG, because it is a DBR (Drop-Base-Rally) and has not been tested by the price yet.
The Fibonacci retracements should serve us as additional confirmation and were taken into account in past movements (last decades).
> Should the price fall further, FIB 1 (0.88 FIB) will serve as resistance. Although due to the previous testing of the 0.786 FIB, the resistance will be crumbling.
> If the sell-off continues, FIB 2 (1.618s FIB) will be the first point of contact for the price and in combination with the arc, can trigger a reaction on the "smaller" time levels.
> The FIB 3 = 0.618 - 0.88 FIB level, in combination with the FIB 4, will trigger the biggest resistance reaction in the market, should such a strong sell-off occur.
The past highs and lows usually serve as resistance / support, one of which we have.
> HIGH | 02/20 - Already showed reactions = Future support
A level of interest is before us, which since 2018, plays a strong role for the market.
> This support, represents the drawn - POI (2,950 USD), which at the time of this analysis, is still far from the price.
CHARTS
S&P500 – Overall picture
S&P500 – Overall picture without trendlines
ATTENTION
In the following time levels, I will only deal with the NEW, added elements.
2. WEEKLY – TIMEFRAME
SUMMARY
Besides the already mentioned trend channel, further trend lines become visible in this one.
- These have caused reactions in the channel in the past and should therefore be kept in mind. (gray)
The monthly "SUPPLY & DEMAND" zones are joined by others from the weekly view that coincide with other resistance / support elements.
- The near "DEMAND" zone has low significance as it has already been tested once by the price.
As other Fibonacci additions, we have two more elements:
> Both newly drawn elements refer to a possible upward movement.
> If there is an upward movement of fundamental magnitude, these levels will be updated again.
CHARTS
S&P500 – Overall picture
S&P500 – Overall picture without trendlines
THIRD PART
CONCLUSION
"The calm before the storm "
Before a thunderstorm breaks out, it suddenly becomes very quiet - currently it is unusually STILL | seen from a macro- and microeconomic perspective.
> Will the calm be broken by a sharp sell-off, or by a price explosion?
In summary, based on technical analysis, there are strong reasons for a falling S&P500 price.
> Since the price top in Jan|2022 - every monthly - Bullish candle, was completely Bearish engulfed.
= Which leads us to conclude a very strong sell-off.
> The divergence on the weekly level, which indicates a price upswing, should be kept in mind - but this is not a reliable indication.
For this reason, I am assuming a weak S&P500 and an accompanying bloodbath in the traditional and crypto markets.
> Positioning after confirmation of this thesis = SHORT
If this idea and explanation has added value to you, I would be very happy to receive a review of the idea.
Thank you and happy trading!
