SPX500 Technical Analysis, October 9, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts


Technical Outlook:

SPX500 might have carved a lower top around 3440/45 levels. It is quite possible that the indice pushes further through 3500 mark before reversing lower again. Bears will be prepared to take back control until prices stay below 3600 handle. Break below 3200 would accelerate further.

SPX500 had terminated a larger degree Wave ((4)) around 2200 lows in March 2020. Subsequently, the indice managed to produce a meticulous rally towards 3588 highs by September 2020. High probability remains for a larger degree Wave ((5)) termination around 3588 handle.

If the above proposed structure holds well, SPX500 should be preparing to reverse lower at a similar degree. It implies that 2200 lows might be taken out within the next few days or weeks. Immediate resistance is seen at 3600, while interim support comes in around 2200 respectively.

Looking into the short term wave structure, the drop between 3600 and 3200 could be an impulse. The subsequent counter trend rally towards 3440/50 levels might be complete, potential lower degree wave ii. If the above holds well, SPX500 might be looking to reverse lower towards 2500 as wave iii begins to unfold.

Also note that the counter trend rally has managed to reach fibonacci 0.618 retracement of the recent drop between 3600 and 3200 respectively. Bears might remain poised to turn the indice lower from here and push below 3200 mark going forward.

SPX500 remains a good candidate to be sold on rallies until prices stay below 3600 mark. The indice might be well placed to carve a series of lower lows and lower highs from here.

Trading Strategy:

Long against 104.00, targeting 111.75

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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