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Elliott Wave Analysis: S&P500 Trading in Final Stages of

Stocks turned strongly lower this summer but only into a temporary three wave retracement as we expected. It was a wave IV pullback that appears completed now, following the recent bounce from 2025 level up to 2160. This is a strong reaction that suggests higher prices into wave V that belongs to an ending diagonal pattern, so despite the current bullish momentum, we expect a top to be formed near the 2200/2300 area.

S&P500, Daily

snp-d

On the lower time frame, we can see that E-mini S&P500 recovered sharply after the drop to the 2030 area, where the market shows now signs of a completed three wave decline in wave IV, from the August highs.

Notice that thecurrent leg up is much stronger than the previous decline, so we believe that a bigger uptrend is back in bullish mode, ideally in wave V, that will be looking to reach new all-time highs. In the short-term however, be aware of a corrective set-back; ideally into wave B flat correction, back to that broken channel that can become a good support next week.

S&P500, 4H

snp-4

 The ending diagonal is a special type of motive wave that occurs primarily in the wave 5 position when price has moved too far and too fast. Some ending diagonal triangles appear in the C wave of an ABC correction. In all cases, the ending diagonal terminates the move of larger patterns. They consist out of five waves, with each having three more sub-waves.

Basic Ending Diagonal Pattern:

ending-diagonal

Gregor Horvat

Gregor Horvat

Grega Horvat Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of Ew-Forecast, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At Ew-forecast he helps clients and educates them about the Elliott wave principle and how to label and track unfolding patterns in real time. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty, however, is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators. EW-Forecast To be involved in the market effectively, you need the right guidance and resources, and our team can help you to achieve that. Our team is providing advanced informations about Elliott Wave theory in real time. The Elliott Wave Principle gives you a method for identifying the behavior of the markets and at what points the market is most likely to turn. We help new traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our views as simple as possible with educational goal, because knowledge itself is power!