Murray Dawes, Editor, Alpha Wave Trader
[After predicting the correction in prices last week, Murray points out the key levels to keep an eye on going forward as this sell-off unfolds. Click on the picture to see what comes next in the S&P 500.]
In last week’s update, I pointed out that a correction in the S&P 500 was close and I showed you where the market should bounce from if prices did sell-off. Prices collapsed as expected and the low in the E-mini S&P 500 was right in the buy zone of the most recent wave up. Exactly where I showed you prices would bounce from.
Now that the weekly momentum has shifted to the downside, I expect there to be further volatility going forward and the current rally should run out of steam around 2950–2990. I’ll be waiting for a daily sell pivot from that zone and if it occurs, I will be planning out my trades to take advantage of it. Because the next leg down in this current weakness could be a big one.
There are now dominoes set up beneath the market around 2700–2775. If prices break below those levels, volatility could go through the roof.
We have a clear line in the sand above the market. If prices break out to new all-time highs from here, you don’t want to be short. Above 3050 could see the ignition of a blow off rally to the upside. So if you are planning to get short the E-mini S&P 500 up in this area, you know exactly where you need to cut and run.
The targets I have to the downside if 2700–2775 can’t hold are all the way down near 2500, so the risk/reward on offer is great.
Editor, Alpha Wave Trader
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