The market broke the 3700 support area last week. Price action is bearish short term, bearish medium term and bearish long term.
As I said was possible last week, we did get a Sentiment buy signal late in the week. And along with it an Odds buy signal. However, we do not have any internal support yet, and almost all internal measures are deep down in the sell side.
On the other hand, it is now so oversold that we just need a spark -- some good news -- to begin a rally higher along with an internal buy signal. The flip side is that it is when we are this oversold that big moves can happen as price follows the path of least resistance. So ... the bottom is very close in time in my opinion, but we may tag lower toward the 200-week moving average in the 3500 area. We do not have to, but it is something I am on the lookout for.
Regardless of whether we tag it or not, I think the best long opportunity of the year is right here or very close, and the next bigger move is higher into the 4300/4400 area. Managing size and not overextending yourself on the long side is, however, going to be key to avoid emotional extremes and also to stay strong handed during the shakeouts along the way. Whichever way this plays out, we have an important week coming up.
As for resistance zones and pivots, grey zone resistance at 3701-32 and then 3829-46. Support is at 3642-13, 3540-07 and then the 3450 area.
For Tuesday, daily pivot is at 3678. Resistance R1 is at 3718.5 and R2 at 3753. Support S1 is at 3644 and S2 at 3604.
All the best to your trading week ahead.