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S&P 500 completes wave 2 pullback near 6775.50 and resumes bullish momentum above the blue box.

The S&P 500 (SPX) appears to have completed its pullback in red wave 2 at the equal legs area near 4776, unfolding in a corrective 7-swing structure. From that support zone, price has turned higher, suggesting wave 3 is now underway. While there remains a possibility that the correction could extend into an 11-swing structure toward the 1.618 Fibonacci extension around 6440, but we are taking a more aggressive stance that the pullback has already ended. The strong reaction from the blue box area reinforces the bullish outlook and supports the idea that buyers have regained control.

Wave 3 typically represents the strongest and most impulsive leg within the Elliott Wave sequence. Early price action is showing constructive characteristics, indicating upside momentum is building. As long as SPX holds above 6775.5083 low, the preferred scenario calls for continued upside extension. We do not recommend selling against the current structure. Instead, pullbacks are expected to remain corrective and provide buying opportunities in alignment with the developing bullish sequence.

Overall, the index is positioned for further upside while holding above key support levels.

SPX 1-Hour Elliott Wave Chart From 2.19.2026

SPX Elliott Wave Video:

https://www.youtube.com/watch?v=uoC7ILk7MrE

Markets

US Treasuries underperformed yesterday with the curve bear flattening. Daily changes ranged between +3 bps (3-yr) and +1.7 bps (30-yr). The US 2-yr yield gets again more breathing room above key 3.4%-support with the 10-yr yield limping away from the psychological 4% area as well. A solid batch of eco data added to the feeling that the Fed stays put in March. December durable goods orders beat the mark on every level, including for the crucial core gauge which serves as a proxy for investments in GDP calculations (+0.9% M/M). Tomorrow we’ll find out when the Bureau of Economic Analysis reports Q4 GDP numbers. Housing data and January industrial production (+0.7% M/M) numbers equally beat consensus. During US trading hours, Minutes of the January FOMC meeting revealed that the vast majority of participants judged that downside risks to employment had moderated in recent months while the risk of more persistent inflation remained. Several participants cautioned that easing policy further in the context of elevated inflation readings could be misinterpreted as implying diminished policymaker commitment to the 2% inflation objective. In an hawkish shift, several would’ve supported two-sided language on the rate path putting the door open for a rate hike if necessary. The data/Minutes-combo helped the dollar out. The trade-weighted greenback (DXY) had its second best day YtD, rising from 97.14 to 97.74. From a technical point of view, the move lacked significance with first minor resistance at 97.99. EUR/USD fell from 1.1855 to 1.1783 with first minor support looming at 1.1766. GBP/USD already closed just below that first technical reference (1.3509) with GBP-weakness this week also at play (following labour market and to a lesser extent CPI numbers). EUR/GBP simultaneously bumps into EUR/GBP 0.8746 resistance with the UK currency at risk of technical follow-up losses in case those levels give away. It's our preferred scenario with UK markets preparing for a March BoE rate cut.

Oil prices grabbed a lot of attention as well with Brent crude preparing a break-out above the $70/b area. Prices jumped by the most since October yesterday after Axios reported that a major war in the Middle East could begin very soon. US officials said that Iran needs to come back with a detailed proposal in two weeks after this week’s Geneva talks. Last summer, the White House set a two-week window to decide between further talks or strikes. Three days later, he launched Operation Midnight Hammer, attacking three nuclear facilities in Iran. The developing narrative is one to look out for today, especially as it doesn’t seem to interfere with a broader risk rebound. Key European indices gained over 1% yesterday with US benchmarks ending 0.25% (Dow) to 0.75% (Nasdaq) higher. The US eco calendar contains trade data, Philly Fed Business Outlook and weekly claims. In Europe, consumer confidence is due. We expect them to play second fiddle today.

News & Views

• Australian January employment grew by 17.8k. That was slightly below the 20k expected but came after an upwardly revised 68.5k in December. Full-time employment rose by 50k, partly offset by a fall of 33k in part-time employment. Strong labour demand was even more visible in the rise in hours worked by 0.56% in January, following an already strong increase in December (0.4%). The unemployment rate stabilized at 4.1%, defying expectations for an uptick to 4.2%. With the central bank’s Q1 forecast at 4.3%, it means downward revisions in the next projections are likely. Labour market participation is at a solid 66.7%. The numbers vindicate the Reserve Bank of Australia, which raised the policy rate earlier this month amid concerns for capacity constraints keeping inflation above target. A tight labour market - the RBA estimates the equilibrium unemployment rate at 4.6% - isn’t going to ease those. Australian swap yields rally 4.4-7.8 bps with front end underperformance revealing increasing rate hike bets. Market implied probabilities for May rise to 87%, for June to 97%. AUD/USD ekes out gains to 0.705.

The IMF in a report yesterday said China’s industrial policies create international spillovers and pressures through overcapacity and have combined with weak domestic demand made Chinese economic growth more reliant on manufacturing exports. It repeated its call to move to a consumption-led model while urging the country to slash state support for the industrial sector. The IMF estimates that China spends around 4% of GDP subsidizing companies in critical sectors and recommended to cut that in half in the medium term. China’s global trade surplus last year for the first time ever surpassed the $1tn mark, with export flows having rerouted from the US (-20%) to Africa (+26%), South-East Asia (+13%) and the EU (+8%).

Daily Pivots: (S1) 1.1756; (P) 1.1808; (R1) 1.1833; More….

Focus is back on 1.1764 in EUR/USD with today's decline. Firm break there will resume the fall from 1.2081. Also, sustained trading below 55 D EMA (now at 1.1763) will raise the chance of reversal on rejection by 1.2, and target 1.1576 support for confirmation. On the upside, though, break of 1.1928 will bring stronger rise to retest 1.2081 high.

In the bigger picture, as long as 55 W EMA (now at 1.1485) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will add to the case of long term bullish trend reversal. Next medium term target will be 138.2% projection of 0.9534 to 1.1274 from 1.0176 at 1.2581. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 153.64; (P) 154.25; (R1) 155.44; More...

USD/JPY's break of 154.63 minor resistance suggests that fall from 157.65 has completed at 152.25 already. Intraday bias is back on the upside for 157.65 resistance first. Break there will target a retest on 159.44 high. Also, with 38.2% retracement of 139.87 to 159.44 at 151.96 intact, price actions from 159.44 are seen as a consolidations pattern only. Larger rally from 139.87 is expected to resume through 159.44 at a later stage.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 151.77) holds. However, sustained break of 55 W EMA will argue that the pattern from 161.94 is extending with another falling leg.

Daily Pivots: (S1) 1.3463; (P) 1.3522; (R1) 1.3554; More...

Intraday bias in GBP/USD remains mildly on the downside as this point. Fall from 1.3867 is extending. Sustained trading below 55 D EMA (now at 1.3518) will raise the chance of larger scale correction. Deeper fall should then be seen to 1.3342 support for confirmation. On the upside, break of 1.3711 will bring retest of 1.3867 high.

In the bigger picture, rise from 1.0351 (2022 low) still in progress and should target 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. For now, outlook will stay bullish as long as 1.3008 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.7708; (P) 0.7721; (R1) 0.7744; More….

Intraday bias in USD/CHF remains neutral for the moment. Consolidations from 0.7603 is still extending. Stronger rebound cannot be ruled out but upside should be limited by 55 D EMA (now at 0.7849) to complete the pattern. On the downside, break of 0.7603 will resume larger down trend, and target 0.7382 projection level next.

In the bigger picture, down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8123 resistance holds.

Daily Pivots: (S1) 0.7022; (P) 0.7055; (R1) 0.7075; More...

Intraday bias in AUD/USD remains neutral as consolidations continue below 0.7146. Deeper retreat might be seen, but downside should be contained above 0.6896 support to bring another rally. On the upside, above 0.7146 will resume larger up trend to 100% projection of 0.5913 to 0.6706 from 0.6420 at 0.7213.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Further rally should be seen to 61.8% retracement of 0.8006 to 0.5913 at 0.7206. This will remain the favored case as long as 0.6706 resistance turned support holds, even in case of deep pullback.

Daily Pivots: (S1) 1.3652; (P) 1.3677; (R1) 1.3720; More...

Intraday bias in USD/CAD remains neutral as consolidations from 1.3480 is still extending. While stronger rebound cannot be ruled out, upside should be limited by 55 D EMA (now at 1.3744) to complete the pattern. On the downside, firm break of 1.3480 will resume larger down trend from 1.4791 to 61.8% projection of 1.4791 to 1.3538 from 1.4139 at 1.3365.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. For now, medium term outlook will be neutral at best, until there are signs that the correction has completed, or that a bearish trend reversal is confirmed.

Daily Pivots: (S1) 0.9097; (P) 0.9119; (R1) 0.9131; More....

Intraday bias in EUR/CHF remains neutral and more consolidations could be seen above 0.9092. With 0.9180 resistance intact, further decline is expected. On the downside, firm break of 0.9092 will resume larger down trend and target 261.8% projection of 0.9394 to 0.9268 from 0.9347 at 0.9143. However, considering bullish convergence condition in 4H MACD, decisive break of 0.9180 will indicate short term bottoming, and bring stronger rebound towards 55 D EMA (now at 0.9224).

In the bigger picture, down trend from 0.9928 (2024 high) is still in progress with falling 55 W EMA (now at 0.9258) intact. Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Outlook will stay bearish as long as 0.9394 resistance holds, in case of recovery.

Daily Pivots: (S1) 0.8716; (P) 0.8734; (R1) 0.8751; More…

Intraday bias in EUR/GBP stays neutral and outlook is unchanged. On the upside, decisive break of 0.8744 resistance will indicate that fall from 0.8863 has completed as a correction. Further rally should then be seen back to retest 0.8863 high. On the downside, sustained break of 38.2% retracement of 0.8221 to 0.8663 at 0.8618 will carry larger bearish implications and turn outlook bearish.

In the bigger picture, rise from 0.8221 medium term bottom (2024 low) is seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8631) should confirm that this corrective bounce has completed. In this case, deeper fall would be seen back to 0.8201/21 key support zone. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.