The Semiconductor Index (SOX) is performing well, following predictions from the Elliott Wave Principle. It hit a high of $5303 after reaching $4647 on May 23rd and is currently around $5180. This aligns with the expected wave extensions, though forecasting these beforehand can be tough. We’ve set up a warning system using colored levels to signal possible reversals, helping protect positions as prices increase. In the short term, we see an ending diagonal pattern forming a “3-3-3-3-3” wave structure. The target for this final wave is about $5420, but a recent dip brings $4925 into consideration as an alternative target. To change the outlook, we need to see a break below current levels. We expect the index to continue its rally since April, reaching new highs before it finishes.

Market Opportunities

Pullbacks are seen as chances for short-term trades, while long positions remain strong from the bullish trend that started in April. Our market analysis is based on what we believe are accurate data, but we can’t guarantee this. Ultimately, market decisions are up to each individual, emphasizing a careful approach to trading and investing. This information is not a specific recommendation and should be viewed in light of your financial goals and risk tolerance. Currently, we see signs of an ending diagonal in progress, which usually signals the end of a larger upward trend. This “3-3-3-3-3” formation suggests a narrowing price range, with smaller upward moves indicating that momentum might be slowing down. We noticed a strong reaction near the anticipated $5300 level, just below the $5420 target. This movement raises concerns about short-term stability. If prices fall below $5100, we’ll pay attention to $4925—a level we thought was less likely but is now more credible as an option. This potential depends on ongoing weakness, especially if trading volume doesn’t support a rise above the recent highs. From a tactical view, the pullback isn’t necessarily a cause for panic. As long as prices stay above $4925, any decline might just be a brief pause before the uptrend continues. Similar dips have happened since April, many of which quickly restored bullish momentum. How prices behave around $5180 in the coming sessions could reveal if we’re facing a minor correction or a broader change.

Tactical Considerations

Therefore, our strategy involves looking at each pullback from multiple angles—potential gaps for short-term positioning while keeping a long-term bias that has been successful since spring. Flexibility is key. A new high above $5303 without a drop in momentum would boost our confidence that the last leg of the diagonal is approaching $5420. On the other hand, a sudden, strong drop below $5000 with increased volume would suggest the structure is complete and shift our focus to potential downsides. We are cautious because diagonals often end with volatility and sharp reversals. It’s not only about hitting targets; it’s crucial to recognize when complacency builds as we near wave completion. Protecting gains from earlier trades becomes the priority if we spot warning signs from both price and market breadth. While the Elliott Wave structure gives us a broader view, we also use additional tools—internal divergences, breadth indicators, and key support breaks—to confirm or dismiss scenarios. Our color-coded alert system is active, working alongside trend aggression and volume readings, providing a multi-dimensional perspective rather than just a one-sided approach. For anyone trading options or futures in tech-heavy sectors, these insights help with timing and selection. The key message is not to blindly chase targets based on charts but to assess if conditions are right for those targets to be realized. Patience allows the market to unfold based on technical factors rather than emotional impulses. We continue to favor strategic entries on weakness, as long as support levels hold firm. Create your live VT Markets account and start trading now.

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