The S&P 500 bounced from a low of 7,507.44 after completing a three-wave pullback into its "Blue Box" buying zone, according to Elliott Wave analysis published on ActionForex. The analysis now targets 7,890 as the next objective, with a break below 7,416 invalidating the setup.
The index dropped into the buying zone and found buyers as expected, with the reaction from the zone delivering a solid bounce, ElliottWave-Forecast said. The firm now considers the correction complete at the 7,507.44 low.
Before the bounce, the index had been forming a three-wave pullback from its recent high, with the correction still appearing incomplete as of the prior update. Analysts had expected another leg lower toward the 7,545–7,416 area, with the broader trend still considered bullish.
That expectation held: the pullback extended into the marked zone before buyers stepped in. With the correction now viewed as finished, ElliottWave-Forecast expects the index to continue higher and eventually break to new highs, with 7,890 as the next target area.
The setup's risk is defined by a Fibonacci extension level. A break below the 1.618 Fibonacci Extension at 7,416 would invalidate the bullish case, according to the analysis. Should the index instead break below its latest low, the analysts say that would open the door to a deeper correction, at which point they would wait for the pullback to develop before identifying a new setup.
For now, the firm's focus remains on the long side, with the 7,507.44 low serving as the reference point for the current bounce.
Source: ActionForex
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