At this time of writing, the US index futures are down around 2% and the S&P500 is trading around the previous lows.
Those lows were captured by the 38.2% Fibonacci retracement level as shown in the chart below.
This uses the range from the March 2020 low to the recent all-time high giving us a price target of 3812. This is circled in red.
This is clearly a line in the sand and an important support level.
If this level fails then the next clear target level would be the 50% retracement level at 3503.
Thereafter we see a price target at the 61.8% level around 3193. This could be a significant target and in order to understand that, we need to zoom out further.
Here is the history of the S&P500 Index all the way back to the “Global Financial Crisis” in 2008 with the final low coming in spring 2009.
The Fibonacci retracements are marked on this and the major 38.2% level sits at 3224.
This will be a significant support level.
Now let us overlay both sets of retracements and we see the following.
The 61.8% retracement of the smaller range is at 3193 and the 39.2% retracement of the larger range is at 3224.
These two numbers are within 1% of each other. See the red boxed area.
In conclusion, this analysis suggests that, should the down move continue then the next target level will be around 3503 and after that we see a significant support level between the prices of 3193 to 3224.
If either of these prices levels line up with our timing cycles, then we can expect a potentially important reversal. The last major time cycle was on the 8th June which heralded this latest sharp decline.
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