The 300 gap is filled. Where are equities headed next?

In part 1 I tried to look for reversal signals but nothing concrete was found. I also looked at trendlines and moving averages to find possible confluence points in the SPX monthly chart. In this post, I am going to continue the analysis and look for confluences on the weekly and daily charts.

To recap, I found 5 potential confluence points on the monthly chart,

2880
2630
2500
2100
3430

Do refer to the post for more information.

The SPX weekly chart

As you can see, the trendlines seem similar to those that I drew on the monthly chart, however, I mention that the points of reference are quite different. In fact the trendlines only stretches to Mar 2013 while on the monthly chart, they stretches all the way to 2009.

On the weekly chart above, I found 3 points of possible confluences. Here goes...

Point (1)

Point (1) is the 2880 level which coincides with the 100W SMA and the 0.782 fib retracement level. Interestingly, this confluence point is also found on the monthly chart.

Point (2)

Point (2) is a bullish scenario. Notice that there is a big gap yet to be filled at the 3320 level which coincides with the 1.272 fib extension level.

Point (3)

Point (3) is the 0.618 fib retracement level at 2735 level. It is close to the 200W SMA but not exactly in confluence. Perhaps after a couple of months of sideway action, we might see a confluence there.

The SPX daily chart

As you can see, the trendlines on the daily chart are quite different. On this chart, I found 4 possible points of confluences and I drew the trajectory of how I think each of this points may be hit in the coming weeks. We are now seeing a rising wedge pattern which is actually quite bearish. If the green lower bound trendline forming the support of the rising wedge is broken, then the bearish move will bring it much lower.

I think in the coming days or weeks, the price will test the upper trendline in the rising wedge. Hence, point (1) is the 3068 level which is the recent top. If it fails to break the rising wedge convincingly then I think it will go to point (2). Point (2) is the 200D SMA and the 0.786 fib retracement level. It is also the lower bound of the rising wedge. It is the 3000 level which is a psychological support as well.

If 3000 is breached, point (3), the 2950 level, will be the next support. We can see a confluence of 0.618 retracement and the 100D SMA. Finally if point (3) is breached, I think we will likely see the 2880 level being the next support. It is a confluence of the 0.382 fib retracement and the next trendline which I drew in magenta. Also notice that there is a gap there to be filled.

Conclusion

On the monthly, weekly and daily charts, the 2880 price level is a recurring theme. Hence, I think there is a strong possibility that we will hit that level in the coming weeks. From there on, I will reassess the situation and look for potential reversal or continuation signals.

Again, I am just sharing my thought process and please do not take it as financial advice. Due diligence and research are still required for your own investments.

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