US500 expecting a bounce? Here are my thoughts.
US500 (Daily Chart)
I'm expecting a bounce to ~4260/70 area. Here's why.
Looking at the AVWAP (Blue lines) from the January 2022 highs and October 2022 lows, we were bound to see some level of support here. I've been saying this for some time now that we'll reach at least 4100.
Given the strong confluence of support around this area (the AVWAP and the horizontal level), I'm expecting a bounce from here. The target for the bounce would be somewhere around the 4260/70 area. If you look at the previous rallies in this correction they're both ~4.7% from the lows of the down moves. If we consider this to be the low of the move, ~4.7% lines up with the 4260/70 area along with the white trend line and potentially with the 50EMA as well, by the time price gets there.
What will determine if this rally will stick or not will be the volume behind the moves. If you look at the volume in the previous rallies you can see that the volume was decreasing quite a bit and rose again as the price began to move lower.
If this rally is to be sustained, we're going to need to see volume and broader participation from the market, otherwise, if/when we get to the 4260/70 area we'll see the next leg lower.
Of course, there will be levels of resistance along the way such as the 4170 area and the 4210 area.
As always, be sure to DYDD and be sure to manage your risk.
I'm expecting a bounce to ~4260/70 area. Here's why.
Looking at the AVWAP (Blue lines) from the January 2022 highs and October 2022 lows, we were bound to see some level of support here. I've been saying this for some time now that we'll reach at least 4100.
Given the strong confluence of support around this area (the AVWAP and the horizontal level), I'm expecting a bounce from here. The target for the bounce would be somewhere around the 4260/70 area. If you look at the previous rallies in this correction they're both ~4.7% from the lows of the down moves. If we consider this to be the low of the move, ~4.7% lines up with the 4260/70 area along with the white trend line and potentially with the 50EMA as well, by the time price gets there.
What will determine if this rally will stick or not will be the volume behind the moves. If you look at the volume in the previous rallies you can see that the volume was decreasing quite a bit and rose again as the price began to move lower.
If this rally is to be sustained, we're going to need to see volume and broader participation from the market, otherwise, if/when we get to the 4260/70 area we'll see the next leg lower.
Of course, there will be levels of resistance along the way such as the 4170 area and the 4210 area.
As always, be sure to DYDD and be sure to manage your risk.