SPX - Near-term Bounce Opportunity

26 thg 2, 2020

The SPX has fallen quite substantially, down approximately 8% over the last few trading days, but a relief rally may be just around the corner.

I would expect at best, a 50% retracement ($325) of the total fall, but being more conservative never hurt anyone, so a target of around the 38.2% ($322) fib level would be quite a feasible target in my opinion.

Whilst it is impossible to determine whether this is or is not the bottom, there are some signs that at least a relief rally may be staged from here.

- Bullish RSI divergence
- Well beyond 3 ATR on the daily (this is a less reliable metric)
- The significant gap between current price action and the key moving averages, particularly between the shorter-term trading moving averages and longer-term averages

Any near-term bounce trade after such a significant drop carries inherent risks, however nothing ever goes straight up or straight down indefinitely, nevertheless, position accordingly.


-TradingEdge