Elliott Wave Analysis: Powerfull Pattern On S&P500 Forming

Good day traders! Let’s look at stocks, S&P500 in particular and its price pattern.

On the S&P500 we can see that a potential top is forming as recovery looks slow which means that bullish momentum is decreasing. Usually this occurs in an Elliott wave ending diagonal; a strong reversal pattern which may cause accelerating drop if 2552 support is out.

S&P500, 1

An ending diagonal is a motive wave that occurs primarily in the wave 5 position. It can also appear in wave C as part of a A-B-C correction. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement. Ending diagonals consist out of five sub-waves, with each one having three minor legs. They also take on a shape within two converging trend lines(as seen on the chart). One part that is crucial for the ending diagonal pattern is that wave one and four overlap.

Here is also an example of the ending diagonal pattern:

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

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com