S&P500 Undergoing a Bearish Reversal 

sp 500 analysis

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S&P500 has turned down from 2596 level where we see a top formation of a wave five after an Elliott wave ending diagonal since end of October. That’s a reversal pattern which normally sends prices back to the start of the pattern, which was at 2543. As such, there is room for more weakness on E-mini S&P500, ideally from here as market made only an A-B-C rally from 2566; a three-wave correction so more weakness is in view.

S&P500, 4H

sp 500 analysis

An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B- C formations. In double or triple threes, they appear only as the final “C” wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.

  • structure is 3-3-3-3-3
  • a wedge shape within two converging lines
  • wave 4 must trade into a territory of a wave 1
  • appears primarily in the fifth wave position, in the C wave position of A-B- C and in double or triple threes as the final “C” wave

Ending diagonal pattern:

ending diagonal pattern


Disclosure: Please be informed that information we provide is NOT trading recommendation or investment advice. All of our work is for educational purposes only.



By Gregor Horvat

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