SPX500 rallies through 4326 highs today. Bearish reversal looks to be due

Technical Analysis:

SPX500 futures has rallied through 4326/27 all-time high yet again today. It seems as if there is no respite for bears as each potential resistance is being taken out every second day. We bring an hourly chart setup today for short term wave study.

SPX500 seems to have terminated an ending diagonal structure since 4035 lows registered on May 13, 2021. The price action might be producing a throw over now and is expected to reverse lower if the pattern has been identified correctly.

Within the diagonal structure, wave iv had terminated around 4130 levels as shown here. If the above ending diagonal structure holds well, SPX500 would drift lower toward 4130 levels at least. This would be considered as the first step towards a potential reversal ahead.

Furthermore, SPX500 might have produced a diagonal structure within wave v as well. The converging potential ending diagonal pattern has been highlighted. If the above is correct, bears might be targeting below 4275 in the near term.

The above structure still remains probable and we need to receive price confirmation below 4275 at least to instil further confidence on the downside. Traders might prepare to go short for now and a break below 4275 would confirm.

Prepared by

Finacademy Technical Team