SPX500 futures struck another high around 4489 mark on Monday, marginally higher than previous swing high at 4486. It is worth noting that RSI on 4H chart presented here has been producing bearish divergence since with each swing highs since 4365.
SPX500 might be looking extremely bullish to most investors but a cautious approach is warranted since RSI has been diverging and the wave counts look to have completed 5 waves since 4035 lows in May 2021. A break below 4350 from here could confirm bearish reversal ahead.
SPX500 has rallied since 4035 lows, sub dividing into 5 waves as labelled here. There might be yet another shallow high print above 4489 mark, but upside potential remains limited from here. It could be safe to refrain from initiating fresh long positions.
The indice might be facing stiff resistance around 4500/30 zone if bulls attempt another rally from here. Also note that fibonacci 0.618 extension target of lower degree Waves I through iii has been hit around 4456 already.
Traders might remain cautious for now as SPX500 trades close to all-time highs close to 4500 levels. The termination of 5 wave rally at a multiple degree and RSI divergence are important factors to be watched for a potential bearish reversal.
Prepared by
The Profinacademy.com Team
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