Technicals | Jun 16 2023
Bottom Line 15/06/23
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 3808 / 3600 – 3400
Resistance Levels: 4200-4300 (?) / 4638 / 4819 (all-time highs)
Technical Discussion
Reasons for optimism above 4200-4300 resistance:
→ our Elliott Wave count remains potentially bullish bigger picture via our ongoing analyses
→ major support zone at 3600 – 3400 continues to hold strong which is a positive
→ the hawkish interest cycle is being closely monitored
→ a traditional base triangle pattern looks to have completed with price action now appearing to be breaking out
Finally, price has broken through our all-important 4200-4300 resistance zone. It is only early days of course and we obviously need to continue to witness further upside follow-through from here. [Last night saw the S&P follow through to 4425 – Ed] Yet price hasn’t been trading at these levels since April 2022 so we are certainly encouraged by what we are witnessing. Especially as we are now seeing hints that over a month of sideways chop has turned impulsive.
The EW A-B-C-D-E triangle vs the traditional A-B-C triangle scenario we have bitten the bullet and labeled the pattern as a traditional triangle on our chart. It means we have the higher degree Wave-(2) locking in back on the 13th of March with the bounce off here locking in a Wave-1 on the 18th of April and a shallow expanded flat for the Wave-2 on the 4th of May. So as we continue to piece this very complex jigsaw puzzle together, if we have this labeling and positioning of the trend correct, then we are now in the throes of a Wave-3 move north which basis EW theory should be an extended move.
Wave-3’s often subdivide though, so it won’t be a straight-line process. Yet Wave-3’s do often extend 1.618 x the length of the Wave-1. So using some simple math this sets the upside target for the Wave-3 to be aligning the 4633 price zone as highlighted in our video tonight. This also happens to be where our next area of resistance resides, so if and when price gets to this area, then some sellers are likely to be there to greet it. This is no issue though and in fact it is how normal ebbing and flowing markets behave. Don’t forget as well we are looking for an initial 5-wave move unfolding here as part of this immediate cycle. So post the Wave-3 high locking in and a Wave-4 shallow consolidation phase, another push north will be the expectation. Let’s not get too far ahead of ourselves though. The 4200-4300 breakout is only a couple of days old, so still plenty of work to do from here to keep ongoing analysis in play from a bullish perspective.
Trading Strategy
We remain long at 4102 with our stop finally raised into some small profits in between reviews circa 4155 post price breaking out of the 4200-4300 resistance zone. The trade has been managed out of a loss position which is always rewarding, so nothing further to do for now.
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