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Hello fellow traders. In this article we’re going to take a quick look at the Elliott Wave charts of SPX ( S&P500) , published in members area of the website. As our members know SPX is showing higher high sequences in the short term cycle from the October 13th low. The index is looking for another push up toward 4080.4+ area ideally. Recovery looks incomplete and we expect to see more short term strength. Recently SPX made a short term pull back that has reached its target area and found buyers as expected. In the further text we are going to explain the Elliott Wave Forecast.

SPX Elliott Wave 1 Hour Chart 11.17.2022

SPX is proposed to be doing Elliott Wave Zig Zag pattern within the cycle from the October 13th Low. Structure is still incomplete. SPX has not reached extremes from the 10.13. low. Besides that , we got only 3 waves up in the cycle from the 3709.8 low which suggests another wave up is still missing. So, current view suggests wave C red is still in progress when we are now in ((iv)) of C. Once current short term pull back completes we expect to see another push up toward 4080.4 area .We expect to see more downside in near term toward 3928.6-3883.4 area. Buyers should ideally appear at the marked zone for the further rally toward new high ideally or for a 3 waves bounce at least.

SPX Elliott Wave 1 Hour Chart 11.19.2022

Pull back reached our target zone at 3928.6-3883.4 ( buyers area). SPX found buyers at that zone and we are getting reaction from there. Rally made enough separation from the lows. As a result, any longs from there should be risk free already and partial profit taken. Wave ((iv)) can be done at 3907 low and we should be ideally trading within wave ((v)) toward 4080.4 area. Alternatively if 3907 low gets broken then we can see 7 swings in wave ((iv)) .

The week is off to a relatively slow start, with Asia trading mostly in the red and Europe and the US poised to do the same.

We don't get many quiet weeks these days but this may turn out to be one of the few, with the US Thanksgiving bank holiday cutting the week short for many traders and the Fed minutes on Wednesday potentially weighing on activity beforehand.

The recovery rally has stalled over the last week or so as Fed commentary has remained more hawkish than investors wanted. The rebound was also much stronger than is arguably warranted, with the Dow up almost 20% from its October lows.

Policymakers appear keen to stress that one inflation number doesn't make a trend and further evidence will be needed to justify a slower pace of tightening. While they will probably be quietly satisfied that inflation has turned a corner, there may also be a determination not to accept that publicly at the risk of undermining its tightening efforts until now. Another good report next month and the tone will almost certainly notably change.

China stocks tumble as COVID-19 cases rise

The recent news has been less good from China, where surging Covid cases have wobbled markets just as we were seeing an improvement in sentiment. A slight relaxation of Covid restrictions and the prospect of more early next year, alongside a 16-point plan to boost the property market, had triggered a strong rebound in stocks in China and Hong Kong but that has been undermined by the recent surge and restrictions.

Not only would fresh lockdowns in major cities take a sledgehammer to growth into year-end, but it could also complicate any plans that are being put in place to soften the zero-Covid policy next year. We're back into uncertain territory which could slow the recovery in stock markets.

Oil slips further amid China woes

The prospect of more restrictions and therefore lower demand in China has weighed on crude prices recently. Brent slipped back below $90 last week and could register the fourth day of declines if it remains in the red. We're seeing bleak economic prospects all around the globe which continues to weigh on oil prices and if interest rates keep rising as they are, expectations will likely deteriorate further.

That will make the next OPEC+ meeting in a couple of weeks all the more interesting. The group came under fire early last month for its decision to cut output targets by two million barrels per day, even as many countries fight inflation and recession in part as a result of higher oil prices. The question now is whether the group be so bold as to cut output again in light of recent price moves and economic developments.

Paring gains but still encouraging

Gold prices are slipping at the start of the week in risk-averse trade that is supporting the US dollar. The yellow metal has performed extremely well in recent weeks as investors have been buoyed by slightly less hawkish rhetoric from the Fed and some much more positive inflation prints.

It's stalled around $1,780 which was previously a very significant area of support and given some back in recent days but it continues to trade well off the lows which is encouraging. The next test of support could be $1,730 where it met strong resistance on the way down in September and October.

Darker days ahead for crypto?

The landscape is not getting any better for cryptos as we continue to learn more about the fallout from the FTX collapse. Bitcoin is off around 4% this morning, trading below $16,000 and looking very vulnerable. Another sharp drop looks very possible as sentiment in the space has been shredded. It could take some time for that to be repaired and the uncertainty that the FTX scandal has created is an enormous headwind for cryptos in the near term. At this point, I wouldn't be surprised to see $10,000 tested again in the not-too-distant future.

Gold price started a fresh decline from well above the $1,780 level against the US Dollar. The price declined below the $1,770 to move into a short-term bearish zone.

The pair even traded below the $1,760 level and the 50 hourly simple moving average. Finally, it traded as low as $1,743 and is currently consolidating losses. On the downside, the price is holding the $1,742 support zone.

The next major support is near the $1,735 level, below which the price might decline towards the $1,720 support level in the near term. Any more losses might call for a test of $1,700 on FXOpen.

On the upside, the first major resistance is near the $1,755 level and a bearish trend line on the hourly chart. The next main resistance could be near the $1,770 level, above which the price could start a steady increase towards the $1,785 level.

Daily Pivots: (S1) 0.9834; (P) 0.9863; (R1) 0.9880; More....

Intraday bias in EUR/CHF is turned neutral again with today's steep retreat. On the upside, firm break of 0.9953 resistance will resume larger rally from 0.9407 to 1.0072 fibonacci level. However, break of 0.9779 will likely resume the fall from 0.9953 through 0.9720.

In the bigger picture, rejection by 0.9970 support turned resistance retains medium term bearishness. That is, while 0.9407 is a medium term bottom, price actions from there would develope into a corrective pattern rather than a reversal. Down trend resumption through 0.9407 is mildly favored at a later stage. This will remain the favored case now, as long 38.2% retracement of 1.1149 to 0.9407 at 1.0072 holds.

Daily Pivots: (S1) 0.8659; (P) 0.8703; (R1) 0.8727; More...

Intraday bias in EUR/GBP is mildly on the downside for 0.8570 support first. Firm break there will resume whole decline from 0.9267. On the upside, above 0.8827 will resume the rebound from 0.8570 and flip bias back to the upside instead.

In the bigger picture, current development suggests that fall from 0.9267 is a down leg inside long term range pattern. Deeper fall could be seen towards 0.8201/8338 support zone. But strong support should be seen there to bring reversal. Nevertheless, firm break of 0.8869 resistance will turn favor to the case that such decline is merely a correction in the up trend from 0.8201. That is, further rally would be seen at a later stage through 0.9267.

Daily Pivots: (S1) 1.5422; (P) 1.5473; (R1) 1.5525; More...

EUR/AUD is staying in consolidation from 1.5704 and intraday bias stays neutral. While another fall cannot be ruled out, downside should be contained by 55 day EMA (now at 1.5280) to bring rebound. On the upside, decisive break of 1.5704 will resume larger rise from 1.4281. However, sustained trading below 55 day EMA will bring deeper correction towards 1.4965 resistance turned support.

In the bigger picture, a medium term bottom should be in place at 1.4281, on bullish convergence condition in daily MACD. Further rise would be seen back to 1.6434 key resistance next. Break of 1.4965 resistance turned support is needed to indicate reversal. Otherwise, further rally will remain in favor.

Daily Pivots: (S1) 144.44; (P) 144.99; (R1) 145.43; More....

Intraday bias in EUR/JPY remains neutral for the moment. Correction from 148.38 might have completed at 142.54. Break of 147.09 resistance will indicate that larger up trend is ready to resume through 148.38 high. However, on the downside, sustained break of 142.65 will bring deeper fall to 61.8% retracement at 139.11 and possibly below.

In the bigger picture, there is no clear sign of medium term topping yet. Up trend from 114.42 (2020 low) could still resume through 148.38 to 149.76 (2014 high). However, break of 137.32 support argue that a medium term correction has already started to correct the whole up trend from 114.42.

Daily Pivots: (S1) 166.21; (P) 166.76; (R1) 167.40; More...

Intraday bias in GBP/JPY stays mildly on the upside for the moment. Correction from 172.11 might have completed at 163.20, after hitting 38.2% retracement of 148.93 to 172.11 at 163.25. Further rise would be seen to retest 172.11 high. On the downside, however, sustained trading below 38.2% retracement of 148.93 to 172.11 at 163.25 will bring deeper decline to 61.8% retracement at 157.78 and possibly below.

In the bigger picture, there is no clear sign of medium term topping yet. Up trend from 123.94 (2020 low) could still resume through 172.11 high at a later stage. However, firm break of 159.71 support will argue that it's already in correction to the up trend from 123.94, and deeper decline would be seen back towards 148.93 support.

Gold prices have been in a declining movement since the pullback off the 1,786 resistance level; however, the bullish crossover within the 20- and the 50-day simple moving averages (SMAs) are suggesting more upside structure in the short-term.

From a technical perspective, the short-term bias is viewed as negative, reflected by the downward move in the RSI and the MACD. The former is heading south after the touch in the overbought area, while the MACD is weakening its momentum in the positive region. The increasing distance between the red Tenkan-sen and the blue Kijun-sen lines is another bearish signal.

Yet only a decisive close above the nearby resistance of 1,786, can boost buying pressure towards the 200-day SMA at the 1,800 psychological mark. Stretching further, the bulls may next test the 1,808 resistance ahead of the 1,880 barrier, taken from the peak on June 13.

In the event of a downside reversal beneath the red Tenkan-sen line and the 1,730 support level the Ichimoku cloud and the 20- and 50-day SMAs at 1,703 and 1,684 respectively may ease selling pressure. Failure to bounce on the latter, could bring the 1,675 support into view ahead of the two-and-a-half year low of 1,615.

In the bigger picture, the market printed a triple bottom in the previous months at 1,615 and the climb beyond the 1,730 endorsed a bullish bias in the near-term. A drop below this level could confirm the broader bearish outlook. Overall though, gold prices have a potential to gain additional ground as a jump above the 200-day SMA at 1,800 is expected to trigger the next upside move.  

Markets

Boston Fed Collins joined the growing chorus of Fed officials trying to reshape market expectations. She said rates need to rise further and even kept the possibility of a 75 bps move on the table. But just as others did, she puts the focus on how high rates ultimately need to be instead of the pace. Her comments helped the dollar to recoup some of the losses endured earlier in the week. Meanwhile, voluntary TLTRO repayments at the ECB were about half of the €600bn estimations, sucking up only a marginal proportion of euro excess liquidity. EUR/USD finished at 1.0325, closing the week below the important 1.035 resistance which was being tested a few times in the days before. The weekly graph now displays a doji pattern, indicating potential further losses ahead. The trade-weighted dollar formed a bullish weekly hammer. Core bonds traded mixed with US Treasuries hugely underperforming Bunds. The US yield curve inverted further with changes between 5.2 bps and 8.3 bps on the account of real yields. German yields’ early attempt to rise soon went into reverse, ending up flat to 1.8 bps lower at the front. UK gilts extended losses following UK finance minister Hunt’s Autumn Statement. Yields rose 3.5 bps (30y) to 6.3 bps (2y). Sterling is given the benefit of the doubt, gaining against the euro (EUR/GBP closed at 0.868) and marginally vs the dollar (GBP/USD closed at 1.189). Risky assets including equities finished 1.20% higher in Europe (EuroStoxx50) and up to 0.6% in the US (Dow Jones). But the likes of oil had an off day. Brent at some point lost about 4.5% before paring some losses. Closing at $87.62/b still meant a weekly loss of 8.7%.

Covid cases in China/Hong Kong are on the rise again and “test” cities that had relatively mild Covid restrictions despite high case numbers saw measures tightened over the weekend, dampening reopening hopes. The story is setting the mood during Asian dealings this morning. Stock sentiment is grim. China and Hong Kong underperform with losses of 2% and more. The dollar thrives in such an environment. USD/CNY advances to 7.16. EUR/USD dips towards 1.027. Core bonds gain.

The economic calendar won’t inspire a lot today. EMU consumer confidence (tomorrow), European PMI’s and the FOMC meeting minutes (both on Wednesday) and central bank policy meetings in Hungary, Sweden and New Zealand will spice the agenda later though. The slew of ECB speakers (Nagel, Holzmann and others) scheduled for today are a wildcard to trading. The US kicks off its end-of-month refinancing operation in a holiday-shortened week (Thanksgiving Nov 24) with both a $24bn 2-y and a $43bn 5-y auction. This could trigger some UST underperformance in a daily perspective. On the FX front, we look out for the dollar to effectively confirm last week’s doji/hammer formation.

News Headlines

The UK Sunday Times reported that senior government officials were exploring a pathway to closer economic ties with the EU under a Swiss-style arrangement over the next decade. The UK government immediately pushed back against the idea with PM Sunak able to address the issue this morning when he’ll deliver a speech at the Confederation of British Industry’s yearly conference. The Swiss-style deal includes several red lines for hardline brexiteers in the tory party, including payments to the budget, EU market regulation and free movement of labor.

Rating agency Fitch affirmed the Italian credit rating at BBB with a stable outlook. Factors that could, individually or collectively, lead to negative rating action/downgrade are debt sustainability concerns for example in case of expenditure pressures, a more severe macroeconomic shock due to energy rationing or other spillovers from the war in Ukraine and a disorderly tightening of financing conditions outside the scope of the ECB’s Transmission Protection Instrument. Italy has a similar BBB (stable) rating at S&P while Moody’s uses a weaker Baa3-rating with a negative outlook.