SPX500 hits resistance around 4456/60 zone; upside remains limited

Written by Finacademy.io

August 13, 2021

Technical Analysis:

SPX500 bulls have managed to print yet another all-time high around 4462 overnight yesterday. As defined on the 4H chart here, the fibonacci 0.618 extension has been hit at 4456 mark. The indice is expected to face strong resistance around the current levels.

SPX500 has been working on a 5th wave extension since 4035 lows in March 2021 as labelled on the chart. Also note that the rally has unfolded into 5 waves labelled I through v and might have terminated yesterday around 4462 highs.

If the above structure is correct, SPX500 bears would be back soon and drag prices lower towards 4235 lows at least. Please also note that 4235 is the previous wave iv termination of one lesser degree and a break lower would then confirm a meaningful top in place.

We still don’t have any price action confirmation of a potential bearish reversal but upside potential remains limited from here. The first support comes in around 4375, which needs to be taken out as the beginning of a reversal ahead.

Traders might be preparing to initiate fresh short positions while price action confirms a break below 4375 going forward. It might be good to remain on the side lines until that happens.

Prepared by

Finacademy Technical Team

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