In July, the S&P 500 experienced a steady rise, departing from expected seasonal trends and Elliott Wave forecasts. The index hit the $6380-6460 range, exceeding predictions and staying above key warning levels of $6177 and $6061, which suggests a chance for a pullback. As the S&P 500 climbed, the warning levels adjusted to $6363, $6336, $6281, and $6201. Despite this increase, there have been no signs of a pullback yet. The anticipated target for the green W-5 is between $6690 and $6820. This links with the larger third-wave target of $6738 to $7121, which indicates an ending diagonal pattern.

July Price Movement

July’s price movements strayed from the usual post-election trends, yet the S&P 500’s ability to stay above important levels hints at further gains. It’s important to monitor for a close below $6336 to foresee the possible start of green W-4, while keeping the larger target in mind. The overall financial landscape shows the EUR/USD bouncing around 1.1450, GBP/USD fluctuating near 1.3200, and gold stabilizing just above $3,300 per ounce. Bitcoin trades between $116,000 and $120,000, supported by ongoing whale buying and a historically low OTC balance. As we head into August 2025, the strong rise of the S&P 500 from July suggests we should acknowledge this upward trend. This could push the index toward the $6690-6820 target zone. Holding long positions through call options or index futures seems prudent while the market remains strong.

Market Structure and Correlation

However, since the index is currently high, we need to be ready for a possible pullback. We will use a close below the $6336 level as our main signal to adjust our outlook. Buying protective put options with strike prices below this level could be a cost-effective way to safeguard existing long positions. The current market setup feels reminiscent of the late 1999 melt-up, where momentum overlooked overbought conditions for a long time. The CBOE Volatility Index (VIX) is hovering around 18, rising from its June 2025 lows and indicating that some traders are beginning to consider higher risks. This reinforces the idea of owning options to benefit from potential price fluctuation. Examining other assets, gold shows strength by staying above $3,300 per ounce, which is notable given the dollar’s recent stability. The World Gold Council’s Q2 2025 report indicated continued buying from central banks, likely creating a support level. For currencies, the Euro’s rise near 1.1450 follows recent comments from the ECB suggesting an end to their rate cut cycle. The Pound’s mixed signals around 1.3200 point to range-trading strategies. In the crypto market, Bitcoin shows very positive signs. Continued whale buying and record-low Over-The-Counter (OTC) balances, supported by exchange data revealing a net outflow of over 50,000 BTC in July 2025, indicate a potential supply squeeze. This encourages long positions using call options or futures, with $116,000 recognized as a key support level. Create your live VT Markets account and start trading now.

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