SPX500 Technical Analysis, August 28, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts


Technical Outlook:

SPX500 continues to print higher highs with each day passing and prints 3501 (Spot) today. The indice trades around 3495 for now and could be poised to test 3550 before reversing lower. Believe it or not, upside remains limited from here as the rally is accompanied by a strong bearish divergence on Weekly RSI. Prepare for a bearish reversal from here, sooner than expected.

SPX500 rally from 2190 lows in March 2020 can be sub-divided into 5 waves as labelled here. Hence the earlier wave structure presented through the past several weeks stands invalid. Furthermore, the indice has exceeded 3400 mark and is trading around 2.6% higher.

SPX500 might have rallied through its larger degree Wave ((5)) between 2190 and 3501 levels respectively. If the above count is valid, we might witness a sharp decline towards 2190, which is larger degree Wave ((4)).

We need to see a break below 3354, which is immediate short term support to confirm the first step of a potential bearish reversal. Also note that prices would break below the trend line support while attempting a break below 3354, which is also constructive for bears.

In a nut shell, the indice remains vulnerable for a bearish reversal from current levels and it could be better to sell on rallies through 3550 or after a break below 3354, going forward. The fibonacci extensions are pointing towards 3580, for Wave 5 to terminate.

Watch out for a bearish reversal from 3550/80 or from current levels (3490). Also note that Dow Jones has failed to print above 29600 highs. This is also a bearish divergence and constructive for a potential reversal.

Trading Strategy:

Flat for now, prepare to sell again.

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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