SPX500 is carving Wave 2 below 4744 mark

Technical Analysis:

SPX500 has been consolidating between 4680 and 4710 since last two trading sessions. The index might be carving a lower degree wave iv before pushing higher toward 4720 mark to complete Wave 2 corrective rally. Bears remain inclined to be back in control thereafter.

SPX500 is carving a classic Elliott Wave pattern since 4744 highs on November 22. The indice dropped through 4500 mark sub diving into five waves, marking an impulse Wave 1. Ideally, an impulse wave is followed by a correction in the opposite direction.

SPX500 has been carving a potential expanded flat corrective structure since the 4500 lows. The sub waves are marked as a-b-c, terminating potential Wave 2 on the chart. An expanded flat unfolds into a 3-3-5 structure, which seems to be close to complete.

Wave c of the corrective rally might push through the 4720 mark before terminating. Also note that wave ii of one lesser degree also terminated around 4720 earlier, which is a common Elliott Wave guideline for larger degree to reach.

The earlier rally from 4270 through 4744 also sub divided into five waves, terminating the fifth wave on a larger degree impulse. All the above are pointing towards a sharp bearish reversal to resume soon against 4750. Traders might be preparing to sell around 4680-4720 zone going forward.

Prepared by

Finacademy Technical Team