In our analysis from April 10, we highlighted that the S&P 500 was trading within a diagonal formation, suggesting that a breakout could signal the start of a broader recovery phase. That scenario has now clearly played out, with price action confirming a shift in market structure and momentum. You can revisit the original idea HERE.
Recovery Phase Confirmed With Impulsive Structure
The S&P 500 is now recovering very nicely and has broken decisively above the 6620 level after moving out of the diagonal formation seen earlier this month. This breakout confirms that the market has transitioned into a new recovery phase, which may extend further in the near term.
Importantly, the advance from recent lows is unfolding in what appears to be an impulsive structure. From an Elliott Wave perspective, this suggests that the move should develop in five subwaves. With that in mind, the current upside likely represents only part of a broader recovery sequence.
Short-Term Outlook: More Upside After Wave 4 Pullback
Given the impulsive nature of the rally, additional upside is expected following a potential wave 4 pullback. This means any short-term dips could be corrective in nature rather than signaling a reversal of the broader trend.
Key support levels to watch on pullbacks are:
6852
7000
As long as price remains supported above these levels, the structure favors continued upside and further extension of the recovery phase.
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