SPX500 Technical Analysis, August 7, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts

SPX500:


Technical Outlook:

SPX500 seems to have finally topped around 3350/55 levels yesterday. The futures are trading lower at the moment around 3325 and could reverse sharply from here. A break below 3200 immediate support would certainly confirm that the indice has reversed lower.

SPX500 wave counts are still clear with higher degree Waves (1) and potential (2) in place at sub 2200 and 3350 levels respectively. The drop from 3400 through 2200 was an impulse, which was followed by a corrective rally towards 3350 levels yesterday.

The recent rally up to 3350 levels had taken quite a few traders by surprise. But the Elliott Waves were very clear about a potential bearish reversal until 3400 remains intact. Today, could be the engulfing bearish pattern we have been waiting for to confirm a trend reversal.

Typically, Wave (2) would retrace up to fibonacci 0.618 levels of Wave (1) before bouncing back towards the major trend. But it has been seen repeatedly that Wave (2) can give a false notion about continuation of the previous trend. The recent rally had made investors feel the same.

Wave (2) has reached much deeper in this case, beyond the fibonacci 0.88 mark. The structure still remains intact since SPX500 stays below 3400 levels. We can expect a sharp reversal from here if 3400 resistance remains intact.

SPX500 might be considered a great candidate to be sold on rallies until 3400 resistance holds good. The downside potential remains through 2200 and beyond. Watch out for a break below 3200 support from here.


Trading Strategy:

Short against 3400, targeting towards 2200 and beyond.

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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