Global financial markets have stabilized on the assumption that the Omicron covid variant is less aggressive than feared and that economic recovery may not be in danger.
We have seen a nice recovery in global stocks and stock markets, with the S&P 500 index approaching all-time highs while the German DAX is eyeing the 16000 price level.
On the U.S. index we see a nice strong recovery. A clear Elliott wave impulse has developed meaning that more upside can be expected… perhaps after a small pullback. This pullback could also be bullish for commodity currencies as the US Dollar may have a hard time breaking above its resistance. Be aware that price support on the S&P 500 is at 4640-4670.
Elliott wave analysis highlighted what appears to be a rally out of a corrective wave 4. It’s currently in a strong and impulsive rally, ideally back to highs for wave 5. At the same time that we need to be aware of more upside, keep an eye out for short-term pullbacks and watch the 4493 level. Note that the previous decline from the highs can also be an alternative wave (A), so any sudden strong decline would be a signal for a more complex correction.
S&P 500 4-hour Chart – Elliott Wave Analysis
As expected, the German DAX is sharply and impulsively down on the 4-hour chart after completing a five-wave bullish cycle from 14800 to 16400. So, it seems like a new, higher degree A-B-C corrective decline is now in progress on a daily chart. This decline can send the price even lower, ideally back to the former wave 4 price support zone around 14800. The index is approaching strong resistance in the 15800 – 16000 area. A sharp reversal down from here would confirm our view for wave C. Be patient.
DAX 4-hour Chart – Elliott Wave Analysis
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