Forex Analysis & Reviews: 21.03.2025 - Federal Reserve throws...

Live Chat

InstaForex Loprais Team - Official participant of the Dakar rally

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex - Official partner of Dragon Racing

21.03.2025 10:21 AM

Federal Reserve throws lifebuoy to stock market

The wave structure on the 24-hour chart for #SPX is fairly clear. The first and most important point is the large-scale five-wave structure, which is so wide that it barely fits in the platform screen even at the smallest scale. In simpler terms, US stock indices have been in a long-term uptrend. But as we know, trends eventually reverse.

At this point, wave 5 of 5 appears to be complete, with the instrument making four failed attempts to break above 6,093, which corresponds to a 200.0% Fibonacci extension from wave 4. In my view, a corrective wave sequence is now unfolding. The US stock market is overheated, and more experts are warning of a "bubble."

On the 4-hour chart, we see a completed complex corrective structure a-b-c-d-e, followed by an upward a-b-c pattern. This suggests that a new downward structure is now in progress, and its first wave closely resembles an impulse.

Hence, I expect an upward wave 2 or b, after which the decline is likely to resume. My current outlook is based on the daily wave count, which implies a prolonged downward movement for the S&P 500.

The Federal Reserve calms market panic, but risks remain

As I previously warned, #SPX has started forming corrective wave b, which could lift the index as high as 5,825—50.0% Fibonacci retracement of wave a. This suggests that while the US stock market may rise in the short term, it will likely be a corrective bounce before the next leg down. Of course, wave structures can evolve in many ways—the retracement could just as easily be 38.2% or even 76.4%, but we do have a baseline scenario for now.

At this week's FOMC meeting, it became clear that only the markets are panicking about Trump's tariffs—not the Federal Reserve. The Fed didn't see any significant negative changes in the economy. The regulator expects inflation to accelerate and GDP growth to lose momentum. Hence, monetary policy will likely be eased slowly, just as previously expected.

However, let me remind you that the market has already priced in the Fed's dovish stance. What matters now is the real state of the US economy and its outlook, which remains cautiously negative. Still, the Fed managed to calm the markets somewhat, though we can't ignore the obvious— the US economy is slowing down. Probably not as fast as markets fear, but slowing nonetheless. Therefore, my wave scenario remains valid.

Final thoughts

Based on the current wave analysis of #SPX, I conclude that the instrument has completed its upward trend phase. In the current environment, I recommend watching 6,125 and Trump's economic policies. His actions—trade wars, tariffs, and import restrictions—pose risks to the stability of the US economy and corporate earnings, making a new downtrend increasingly likely.

The "bubble" in US stock markets appears fully inflated. The 4-hour chart allows for one more upward wave, followed by a bearish move. The 24-hour chart confirms the start of a larger downtrend. On the higher timeframe, the wave picture is even clearer: a clean five-wave structure, with another five-wave pattern inside the fifth wave—a classic indicator that we may be nearing the end. This all points to a lengthy and complex correction, which may have already begun.

Key principles of my analysis:

Wave structures should be simple and clear. Complex patterns are difficult to trade and often change.
If you are uncertain about the market trend, it's better to stay out.
There is no 100% certainty in price direction. Always use Stop Loss orders to protect your positions.
Wave analysis can be combined with other analytical methods and trading strategies for a more comprehensive approach.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.