Let’s start with the S&P 500.
The S&P took a mighty drop as we all know. It was in terms of time and percentage only seen three times since 1896. We now see a bit of a rebound which experts, as experts are wont to do, term it a ‘relief’ rally. We are going to term it a profit taking wave by the short sellers. The Fibonacci proportions on the chart measure the leg down. The rebound has stopped at exactly 38.2% of the leg down. This is the most common stopping point for – in Elliot Wave terms – wave four. Having said that, the price can still go to 50 – 62.8% of the leg down. We shall expect the price to drop tomorrow into the final wave of this leg.
It is an important point because it will tell us if this is a correction of the move up or the start of a down trend.
Let’s take a look at the SDS which is our ETF proxy for the S&P declining.
If you look at the chart of SDS, you can see that the price has dropped (the inverse of the rise in the S&P itself) across the 21 EMA (blue line). A rise back across the 8 EMA (red line) would trigger us into a trade.
Gold: Still in a downtrend.
Bitcoin: still in a downtrend but the price is crossing the blue (21 EMA). I will make a trade just under the candle that closes below the red line (8 EMA). Chart to come if that happens.
EUR/USD: still in a downtrend. This means in currency pair terms that the US dollar has strengthened against the Euro.