Where is the stock market heading as the upside correction is intensifying
Let us look at the price action positioning of the Indices as the market is reaching a strong correction level
SPX-S&P500
We were using our usual top-down trading analysis, for this trading technical analysis and potential trade entries. When we look at the S&P500 weekly chart we can see that the instrument is pulling back into the 50% Fibonacci retracement level of the latest swing down 2620 level. A daily close above this level could expose us to a deeper upside pullback into the 2730 level.
On a daily chart, we can see a rising wedge with the upside resistance at 2620 and a downside breakout 2580 level. A downside continuation would be warranted on a daily close below the 2550 level.
NASDAQ
On the Nasdaq weekly chart, we can see that the instrument is approaching the 50% Fibonacci retracement as well and a sharp falling trendline which will provide strong downside support and an upside resistance.
On the Nasdaq daily chart, we have no signs of the reversal near the key downside support zone. A daily close below the 6450 is required for a downside continuation.
DAX
In Europe, the DAX Index is closest to an upside reversal breakout in the case of a daily close above the 11100 level. That could open an upside test of 11500 level. Rejection here just at the previously broken long-term uptrend line could lead to a test of 10000 level.
NIKKEI
Nikkei weekly chart is revealing to us a key 21000-21500 zone which is the strong downside support and a reversal resistance if the instrument closes above the 20800 level. For a downside continuation, high probability continuation, we need to see a daily close below the 19500 level.