SPX500 Is Approaching 3500 Handle.

26 August 2020

SPX500 bulls have managed to print higher with each day passing recently. The indice is trading close to 3478 as we prepare the article and has taken out 3400 mark with ease. Believe it or not, the larger degree wave structure remains unchanged and bears are expected to be back in control soon.

SPX500 probable wave counts are as follows: Since 3400 resistance has been take out, the wave counts have been re-labelled here. The drop between 3400 and sub 2200 might have terminated a larger degree Wave ((4)) as marked on the chart here.

The rally from sub 2200 levels through 3478/80 could be seen as the final Wave ((5)), at a larger degree. If the above counts hold well, we could witness a sharp reversal lower back to 2200 lows. A break below 3350 will confirm potential trend reversal.

Major Price support is seen around 3200 levels on the daily chart here, while resistance is just below 3500 respectively. Bears are looking poised to break below 3200 and enter into the sell zone of the immediate trend line support through March 2020 lows.

Also note that SPX500 price has rallied with a negative/bearish divergence on the daily RSI. Further, Dow Jones has struggled to print above February 2020 highs at 29600. These bearish divergences should not be ignored.

Most traders would be standing aside, waiting for a bearish reversal to initiate fresh short positions. Please note that upside remains limited and it is good to sell on a potential top and reversal.

Prepared by
Technical Analysis Team

Disclaimer: This information has been produced by a third party, for general information purposes only, and is not indicative of future results. Abans Global takes no responsibility for its accuracy or completeness. Any opinions expressed do not reflect those of Abans Global. This information does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should seek independent advice before making investment decisions. Reproduction of this information, in whole or in part, is not permitted. Please note: If you are a Professional client, you are not eligible for negative balance protection and you could lose more than your initial deposit.

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