RSI and Trendlines – SPY
SPY Trend Line Forecast
S&P500 shifted to new highs today, but how long will the trend last? As we can see, with price making new highs, RSI has made lower-highs. A possible sign of a impending short-term top. On this chart as well, I’ve drawn two trend lines to capture the recent upward movement from August 07, 2024 close to now. Price breaking below 526-527 downward could lead to a short-term pullback. To find the price prediction, now lets look at the Elliott Wave count:
SPY Wave Count Forecast
The Wave Count
Similarly to the RSI divergence, our wave count is expecting wave ((i)) to be complete soon, and a pullback for wave ((ii)). This is an upward move within red wave 3, and is very bullish. The fact that Elliott counts and RSI agree with short-term upward movement with a pullback coming soon is a good indication of what’s to come and adds some probability to this outlook.
Elliott Wave theory attempts to fit a frequency to the price movements, with major moves measured in five, nine, and thirteen (adding four from there). Corrective waves are measured in three, seven, and eleven, adding four from there. Upon completing one set of waves we expect a correction the other way with the opposing characteristics. With the case built now for limited price action tomorrow with a pullback thereafter. Let’s see how it plays out!
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