SPX500 seems to be ready to resume lower towards 3700 levels in the next few weeks. The indice had earlier rallied through 4245 levels carving a potential meaningful top. The decline thereafter was an impulse, clearly unfolding into 5 waves towards 4036 levels.
SPX500 might have carved its first impulse lower indicating a beginning of a trend reversal. Also note that the subsequent rally towards 4232 had unfolded into 3 waves, which is corrective. It was a standard flat labelled as A-B-C on the chart here.
If the above structure holds well, SPX500 would ideally stay below 4232 mark and continue drifting lower towards 3900 and 3700 levels respectively. The corrective rally had reached up to fibonacci 0.786 retracement of the earlier drop.
Looks like Waves 1 and 2 are terminated at 4036 and 4232 respectively. If correct, Wave 3 might unfold anytime soon. Alternately, if lower degree wave iv terminated around 4166 yesterday, SPX500 might carry above 4232 to terminate Wave v of C, before reversing lower.
The indice might be preparing to produce a bearish reversal at a larger degree and hence potential remains for a drop much below 3700 mark going forward. We do not rule out the possibility for March 2020 lows at 2200 being re-visited.
Most traders might be preparing to initiate fresh short positions or hold existing ones from 4210/20 levels. A break below 4030 will confirm that bears are back in control and are here to stay for long. Watch out for a break below 3860 in the near term.
Finacademy Technical Team
EURUSD has finally reversed lower from 1.2218 highs last week, after having drifted sideways for a while. The drop was much anticipated as bears have managed to take out over 300 pips since last Wednesday. They remain poised to target below 1.1700 in the near term.
US Dollar Index has raised through 92.00 levels as of now and bulls are looking poised to extend further through 95.00, 96.00 levels in the next few weeks. It is quite possible that they continue higher from here itself or after a pullback, but prices stay above 89.60 levels.
USDJPY breaks higher towards 110.80 levels yesterday as the technical direction was clear and discussed here. At times market awaits a trigger to push through its determined trend; it was the Fed interest rate yesterday that provided the same.