SPX500 Holds Below Interim Resistance At 3230

09 July 2020

SPX500 is looking to resume lower towards 2750 and 2500 levels from here as bears are poised to remain in control from here on. The indice might have completed a lower degree corrective flat around 3180 and could be turning lower again.

Let us have a look at higher degree potential wave counts. The SPX500 had dropped from 3400 on February 24 through 2200 on March 23, 2020 respectively. This is not seen on the hourly view presented here, and is marked as Wave (1).

The subsequent rally between 2200 and 3230 was counter trend and unfolded as a corrective zigzag. The termination has been labelled as Wave (2) of a similar degree. If the above higher degree counts are correct, SPX500 should stay below 3230 and proceed lower as Wave (3) unfolds.

Looking at the potential lower degree wave counts now. The drop between 3230 and 2965 was in 5 waves, hence impulse. It has been labelled as Wave 1 on the chart here. An impulse is usually followed by a corrective wave in the opposite direction.

SPX500 followed up with a counter trend rally since 2965 levels and unfolded a flat corrective structure that terminated around 3184, labelled as potential Wave 2 here. If the above lower degree counts are correct, SPX500 should stay below 3185 and resume towards 2750 levels.

Overall, SPX500 remains bearish against 3230 interim resistance and broadly against 3400 mark. Most traders might have initiated fresh short positions around 3200 mark, with stops above 3400 and potential target below 2750 and 2500 respectively.

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