SPX500 Technical Analysis, October 30, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts


Technical Outlook:

SPX500 has dropped through 3260 lows and is seen to be pulling back a bit. Near term potential remains for a push towards 3200 to complete the first impulse wave lower from 3540 levels. The indice had carved a potential Wave 2 at 3540 levels on October 12, 2020 before reversing lower again.

Ideally, if Wave 3 is underway from 3540 mark, bears would remain in control and continue lower towards 2900 levels at least. If wave 3 is extended, we could see prices dropping further towards 2700/50 levels, before finding support.

The above drop also converges to fibonacci 0.618 retracement of the previous rally between 2200 and 3600 respectively. If a bullish bounce appears around 2700 levels, SPX500 might resume its rally towards fresh highs. Alternately, if a major top is in place at 3588 levels earlier, SPX500 will drop straight through 2200 mark and further.

Either way, SPX500 bears are expected to remain in control until prices stay below 3588 and push lower towards 2700/50 levels at least. The indice might print one more low around 3200 mark before managing to produce a pullback rally.

Immediate resistance is seen around 3550, followed by 3588 mark, while support comes in at 3200 levels respectively. A break below 3200 will confirm that bears are back in control and are here to stay for long. Any pullback rallies from here should find resistance around 3400 zone and remain well capped below 3600 levels.

SPX500 might be setting up for a huge reversal and it remains to be seen how the indice reacts around 2700/50 mark. A push below 2500 will confirm that bears are poised to take out 2200 maek.

Trading Strategy:

Short against 3600, targeting 2750 at least.

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