SPX500 Technical Analysis, August 14, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts


Technical Outlook:

SPX500 seems to have carved a lower high around 3388 levels, just shy by a few points from 3400 resistance. The indice is set to be back in control of bears but prices need to stay below 3400 mark, going forward. Short term support is seen around 3326 levels and a break lower would confirm a top is in place.

SPX500 wave structure seems to be a classic 5-3 Elliott Wave pattern. The drop between 3400 and sub 2200 was in 5 waves, making an impulse which is labelled as Wave (1). This was followed by a counter trend rally towards 3388 levels, which is corrective (3 waves).

If the above structure holds well, SPX500 should stay below 3400 mark and swiftly reverse lower towards fresh lows in the coming weeks and months. The drop could be marked as Wave (3) at the same degree and is expected to drop below 2200 handle.

The indice has rallied past the last fibonacci retracement but the bearish structure would still remain valid until SPX500 remains below 3400 resistance. Also note that Wave (2) can travel mush deeper towards the origin of Wave (1), but should not cross the extreme.

A break below 3200 would be the first sign of a potential bearish reversal ahead. Also note that price would enter the sell zone of its counter trend line support. It would be considered a safe strategy to sell on rallies thereafter.

SPX500 remains a great candidate to be sold on intraday rallies with target potential towards 2750 and lower, going forward.

Trading Strategy:

Short against 3400, targeting below 2200.

Legal Disclaimer: This article is not investment advice. The data provided is for marketing material purposes and is not intended to confuse nor guide our clients on trading decisions. Any investment activity performed is perceived to be a self-directed decision. Exclusive Markets is not liable for losses that may occur because of a decision made after reading the information published on our research page or any other media.

Risk Warning: Trading the capital markets is risky therefore further knowledge and experience may be required. Apply appropriate risk and money management always and ensure the implementation of safe leverage.

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