SPX500 Faces Strong Resistance Around 3400
23 July 2020
SPX500 might be ready to reverse lower towards 2750 levels over the next few weeks. The indice has reached up to 3280 levels in the recent counter trend rally that had begun from sub 2200 levels in March 2020. Bears might be poised to be back in control.SPX500 probable wave counts are as follows: The indice had dropped from 3400 highs in February 2020, through 2200 lows in March 2020. The drop was clearly sub divided into 5 waves, hence making an impulse wave.
Ideally, an impulse wave or a motive wave is followed by a corrective wave towards the opposite direction. It is simply know as counter trend, which ca take shape of a zigzag, flat or a triangle. SPX500 also produced a corrective zigzag.
The corrective wave has managed to reach 3280 levels. Which is also fibonacci 0.88 retracement of the earlier drop, Wave (1) on the chart. This is a typical property of Wave (2), which reaches close to the beginning of Wave (1), but does not exceed.
High probability remains that SPX500 has terminated potential Wave (2) around 3280 levels. If the above counts hold well, the indice should be well on its way lower towards 2750 and further over the next several weeks.
Most traders might be looking to sell more around current price 3280. With a potential stop above 3400 levels and projected targets below 2750, 2300 and 2200 respectively. Only a break above 3400 nullifies the above.
Prepared by
Technical Analysis Team
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