SPX500 Technical Analysis, October 23, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts

SPX500:


Technical Outlook:

SPX500 might have carved a meaningful lower top around 3550 levels over the last week. The fact that prices have pulled back indicates a potential resumption lower from here. Having said that, please note that strong resistance remains intact at 3588 mark.

SPX500 is expected to remain in control of bears until prices stay below 3588 levels, going forward. A push below 3200 would confirm a top in place and also accelerate lower towards 3000 and 2800 levels at least, over the near term.

SPX500 had dropped through sub 2200 levels in March 2020. Since then, the indice has remained in control of bulls and managed to carve a series of higher highs and higher lows through 3588 highs. The entire rally has unfolded into an impulse (sub divided into 5 waves).

Ideally, an impulse is followed by a corrective wave in the opposite direction. Even if a corrective drop is underway, SPX500 might be looking to push through 2700 mark at least. Please note that 2700 is close to fibonacci 0.618 retracement of the entire rally between 2200 and 3600 respectively.

Alternately, it is also highly probable that SPX500 has terminated a larger degree Wave ((5)) around 3588 mark. If the above is correct, we might witness a sharp reversal towards 2200 levels and beyond, over the next several weeks. Bears are looking poised to remain in control.

SPX500, along with other global indices might be a good candidate to be sold on rallies, with a potential target below 2200 levels. Bottom line remains that prices should stay below 3600 mark.


Trading Strategy:

Short against 3600, target is open.

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