SPX500 has reached dangerously close to 3400 and might be threatening to break higher. Believe it or not, if in that case, the upside remains shallow and indice is expected to come under pressure. The structure is bearish until 3400 levels hold.
SPX500 probable wave counts are as follows: The indice had earlier dropped from 3400 through 2200 levels, sub-dividing into 5 waves. The impulse drop has been labelled as larger degree Wave (1) on the chart here.
Ideally, an impulse is followed by a corrective wave and the rally from 2200 through 3388 could be the counter trend rally. It looks to be in 3 waves until now and managed to reach extremely close to 3400 mark. Also note that SPX500 has crossed above the fibonacci 0.88 retracement and probability remains to print marginally above 3400.
As a typical property of Wave (2), it could rally close to the Wave (1) top (here 3400) giving a sense of breaking it. But unless it breaks, the structure remains valid and a sharp reversal can be expected. In this case, Wave (2) has reached 3388 until now, and till 3400 remains intact, the structure is looking bearish.
SPX500 immediate support is seen towards 3320 levels, while resistance is intact around 3400 levels respectively. A break below 3300 would be the first sign of the beginning of bearish reversal. Traders might remain inclined to hold short positions, with a protective stop above 3400 and projected targets below 2700, going forward.
Technical Analysis Team
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