SP500's latest price action, through the lens of Elliott Wave theory, is indicating a potential SHORT setup. The completion of what appears to be an impulsive wave (3) and a corrective wave (4) suggests that a downturn might be on the horizon as part of a new impulsive wave sequence.
The corrective wave (4) has retraced to the 0.382 Fibonacci level of wave (3), which often acts as a resistance in such setups. If this pattern holds true, we could expect wave (5) to initiate a bearish run, potentially targeting the Fibonacci extensions below the end of wave (3).
Given the recent overextension in the markets and rising concerns over valuations, this bearish outlook aligns with a broader sentiment of caution among investors. Timing will be key; a strategic entry point can be sought at the end of wave (4), with a stop-loss set just above its peak to manage risk efficiently.
Traders considering this SHORT position should keep a close eye on market reactions at key Fibonacci levels and adjust their strategy accordingly to capitalize on the expected downward movement.
The corrective wave (4) has retraced to the 0.382 Fibonacci level of wave (3), which often acts as a resistance in such setups. If this pattern holds true, we could expect wave (5) to initiate a bearish run, potentially targeting the Fibonacci extensions below the end of wave (3).
Given the recent overextension in the markets and rising concerns over valuations, this bearish outlook aligns with a broader sentiment of caution among investors. Timing will be key; a strategic entry point can be sought at the end of wave (4), with a stop-loss set just above its peak to manage risk efficiently.
Traders considering this SHORT position should keep a close eye on market reactions at key Fibonacci levels and adjust their strategy accordingly to capitalize on the expected downward movement.
Trade closed: target reached
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