SPX500 might test 4450/60 levels before carving a meaningful top

Technical Analysis:

SPX500 had managed to print a marginal high around 4431 yesterday, indicating there might be still some upside left before carving a formidable top. Probability also remains for the triangle consolidation to continue before the final thrust rally higher.

SPX500 needs to drop below 4375/80 levels to confirm a meaningful top in place and that bears are back in control. The indice might have completed Wave d within the triangle consolidation yesterday. If correct, Wave e lower can be expected before one more push higher through 4450/60 levels.

SPX500 might be very close to completing its 5 wave rally from 4035 lows since March 2021. As labelled here, lower degree wave iv had terminated around 4235 earlier and wave v is in progress since then, as bulls remain close to carving a major top soon.

The indice is also showing strong bearish divergence on the 4H chart of the RSI as displayed here. Since wave iii top around 4490 levels, the RSI has remained lower with each progressive high. Further, a break below 4235 would be seen as a strong confirmation of a bearish reversal.

Trader might remain sideways for a while and allow the thrust rally to push through 4450/60 zone. They could prepare to enter fresh bearish positions thereafter.

Prepared by

Finacademy Technical Team