SPX500 Technical Update – Wave 2 Appears Complete, Focus Shifts to Trend Continuation

The current technical structure continues to favor the bearish primary count. While the recent rebound has been stronger than initially expected, the confluence of technical evidence suggests that the blue Wave 2 has likely completed, and that the market is preparing to resume the dominant decline within the descending corrective channel.

From an Elliott Wave perspective, the recovery has reached a high-probability termination zone. Price retraced into the 70.7–78.6% Fibonacci retracement region, a classic reversal area for second waves. Importantly, it approached—but did not invalidate—the previous swing high, preserving the impulsive bearish structure.

The rally also stalled precisely beneath the upper boundary of the descending channel, which has repeatedly acted as dynamic resistance throughout this correction. As long as price remains inside this channel, the prevailing trend must still be considered bearish.

The Volume Profile (VPVR) reinforces this view. Price has entered a high-volume node where supply previously dominated. Acceptance above this area would be required to invalidate the bearish scenario, but so far there is no confirmed breakout.

Momentum indicators show a mixed but consistent picture:

• MACD remains above its signal line, reflecting the strength of the corrective rebound. However, momentum has not yet produced a decisive bullish breakout beyond structural resistance.
• RSI recovered above 50, indicating improving short-term momentum, but remains well below extreme overbought conditions and does not, by itself, invalidate the larger bearish trend.
• ATR continues to expand, confirming increasing volatility. Such expansion often precedes impulsive directional moves rather than prolonged consolidations.
• Relative Volume (RVOL) remains elevated (approximately 1.5–1.6), confirming that participation during the rebound has been above average. Nevertheless, elevated volume at a major resistance zone can represent either accumulation or distribution. Confirmation will come from the market’s reaction over the next few candles.

From a structural perspective, the evidence continues to favor the interpretation that this advance represents a corrective Wave 2 rather than the beginning of a new impulsive uptrend.

Key technical observations

• ✔ Blue Wave 2 appears to have reached a typical Fibonacci reversal zone.
• ✔ Price remains contained within the descending corrective channel.
• ✔ Resistance is reinforced by the channel, Fibonacci confluence and the high-volume VPVR area.
• ✔ Elliott Wave count remains valid while the recent high is not exceeded.
• ✔ ATR and RVOL indicate that the next directional move is likely to be significant.

Confirmation of the bearish scenario

The preferred count will gain considerably more confidence if price:

• rejects the upper channel boundary;
• loses short-term support;
• sees the MACD roll over;
• breaks below the recent swing lows with expanding volume.

Under that scenario, the next expected development would be the beginning of Blue Wave 3, which, according to Elliott Wave theory, is typically the strongest and most impulsive leg of the trend.

At this stage, the highest-probability scenario remains that Blue Wave 2 is already in place and that the broader bearish trend will resume while price remains inside the descending channel. As always, price action—not prediction—will provide the final confirmation.