SPX500 might have carved a potential top around 4482 levels early this week. The indice has since turned lower, dropping through 4352 levels before finding support. It is trading just around 4400 levels as we prepare to publish and might remain sideways for a few trading sessions before turning lower again.
The wave structure since 4035 low in May 2021 is looking like an impulse, which terminated around 4482 levels. The rally between 4035 and 4482 clearly sub divided into 5 waves labelled as I through v here. Also note that SPX500 has terminated 5th wave at multiple degrees.
If the above is correct and holds well, SPX500 is preparing to drop lower at a larger degree. A minimum drop can be expected to break below 4035 levels, going forward. It would be interesting to see the lower degree waves unfolding now.
We do not see any impulse drop for now and high probable wave count from 4482 levels could be 3 waves until 4352 respectively. If lower degree wave iv unfolds as a triangle structure, SPX500 might continue lower below 4352, to complete an impulse wave.
A break below 4300 and 4235 would be considered encouraging for further bearish setup. Traders might consider to sell on rallies thereafter.
Finacademy Technical Team
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