SPX500 bulls seem to be exhausted after hitting all-time high at 3935 mark early this week. The indice had sharply reversed thereafter dropping through 3884 levels, carving the first lower degree Wave 1. It has been drifting sideways within a triangle structure since then.
Ideally, SPX500 stays below 3935 high and breaks below 3884 mark to proceed towards 3669 support. Please note that 3669 is Wave 4 termination and also fibonacci 0.382 retracement of the entire rally between 3230 and 3935 levels respectively.
The above rally since October 30, 2021 lows seem to have completed 5 waves through 3935 highs, terminating as an impulse. Ideally, an impulse is followed by a 3 wave corrective drop to complete the pattern.
SPX500 might be preparing for a corrective drop towards 3500 levels at least before turning higher again. Alternately, if bears continue to remain in control and push prices below 3380 consistently, it might be a threat to 3200 support.
If the alternate count unfolds accordingly, it could be significant bearish reversal in magnitude going forward. The US Equity markets have enjoyed a religious uptrend since last few decades and this could be the time of a major reversal ahead.
SPX500 remains vulnerable along with the Dow Jones and NASDAQ over the next few trading sessions. As investors and traders begin to believe a new rally has just begun in 2021, we would like to send a warning for potential reversal ahead.
Finacademy Technical Team
Gold dropped to $1770 mark on Tuesday before finding some support. The yellow metal is still testing its intermediate trend line support connecting $1721 and $1758 levels respectively.
The US dollar index carves a meaningful top around 96.88 mark over the last week. The index reversed sharply on Friday confirming a bearish Evening Star candlestick pattern on the daily chart.
EURUSD has carved a potential bottom at 1.1186 mark over the last week. EURO bulls have managed to stage a 150 pip rally thereafter, before pulling back.