SPX500 might have resumed lower towards 3650 and 3230

Technical Analysis:

SPX500 finally prints a lower top around 3938 levels yesterday and reverses sharply lower. The indice has managed to drop through 3810 (futures) as we prepare this article and might push further towards 3715 or 3650 before pulling back.
SPX500 is testing its six-month-old trend line support since October 30, 2020 lows around 3230 mark. A break here will accelerate further drop towards initial support around 3650 as marked on the 4H chart here.
Looking at the recent wave counts since 3963 highs, SPX500 has terminated Wave 1 and 2 already around sub 3800 and 3938 respectively. Wave 3 seems to be underway since 3940 levels and is expected to drop through 3700 marks at least.
In case of Wave 3 is extending, SPX500 might rally from current levels through 3860 levels before turning lower again. It could be marked as lower degree wave ii within Wave 3 as the downside accelerates going further.
SPX500 bears might remain inclined to produce a much deeper bearish reversal and they could break below 3230 levels, the October 30, 2020 lows. If correct, it could be seen as the first step towards a much deeper corrective drop ahead.
SPX500, alongside Dow Jones and NASDAQ, might remain vulnerable for further declines. Bottom line for bears to stay in control is 3963 mark. The indice could be sold on any intraday rallies through 3850/60 levels going forward.

Prepared by

Finacademy Technical Team