SPX500 breaks trend line support and prints 3722

Technical Analysis:

SPX500 continued to dig lower yesterday and hit 3722 mark before finding interim support. The indice seems to be carving series of Waves 1 and 2 at different degrees indicating an extended wave iii might be underway. The next immediate target is below 3660 as shown here.
SPX500 had completed 5 wave rally from October 30, 2020 lows at 3230 mark. Wave 4 of the above rally had terminated at 3665, which should be broken to confirm a major trend reversal on its way. Bears might be inclined to print lower lows and lower highs from here.
SPX500 might have carved a meaningful top around 3963 mark as it seems to have terminated Wave 5 at multiple degrees. If the above structure holds well, the indice might not see recent prices for the next several months to come.
It should also be noted that 6 months trend line support since October 30, 2020 has been broken already as seen on the 4H chart presented here. Furthermore, SPX500 had tested the backside yesterday around 3843 before reversing sharply.
The indices clearly trades into the sell zone of its support trend line and a break below 3665 would confirm a potential trend reversal in the making. Looking at the wave structure, SPX500 seems to be progressing into Wave 3 since 3938 mark and short term target points to 3550 at least.
Going forward, the 3790 zone is expected to provide resistance and might be considered good to initiate additional short positions there. Bears are expected to remain under control until 3963 remains intact and SPX500 should print lower lows and lower highs.

Prepared by

Finacademy Technical Team