S&P 500 Breaks Above $4,000 in Wave 3 of Wave 3

The S&P 500 (US500) uptrend remains strong. In fact, the recent price surge (blue arrow) might be the strongest push since the very start of the uptrend in March 2009.

How far can the bullish trend go? Let’s review the key targets and price patterns.

Price Charts and Technical Analysis

The S&P 500 bullish price swing has a very steep bullish angle (blue arrow). This is indicating very strong momentum. Will the uptrend last?

1. The AO and ecs.MACD histogram bars are also showing no signs of weakening. In fact, the bars are reaching new highs, which is confirming the uptrend strength.
2. Considering the strong momentum (blue arrow) and strong oscillator bars (point 1), the current push up is probably a wave 3 (purple) of wave 3 (red).
3. This means that the uptrend is far from over and could push up substantially more before running out of steam.
4. Price action has now reached the -27.2% Fibonacci target after bouncing at the 50% Fibonacci level during March 2020.
5. The Fib target might create (but does not have) a bull flag chart pattern (grey arrow). If a bull flag does appear, then the breakout (green arrow) indicates and confirms an uptrend continuation.
6. Price action should respect the 21 ema zone and previous top (blue box) if it wants to remain in bullish territory.
7. The next targets are located at the round levels of $4250, $4500, $4750, and $5000.

On the daily chart, price action is expanding the wave 5 (pink) with an internal 5 waves. Currently price action seems to be in a wave 5 (orange) of wave 3 (grey):

1. An immediate push higher (green arrow) after perhaps a light pullback (grey arrow) should aim at the -61.8% FIbonacci target near $4100.
2. The wave 5 (green) could push as high as $4400-4500. Internal extensions might keep pushing price action higher.
3. Eventually, an ABC pullback could take place at one of the target zones (orange arrows).
4. As long as the pullback respects the support zone (green), then the retracement is likely a wave 4 (blue).
5. After that, one more push up is expected to complete 3 (grey. Another wave 4 (grey) and wave 5 (grey) should complete the larger wave 5 (pink) of wave 3 (purple).

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter 

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