[FREE] S&P 2:31PM Elliott Wave Article - Re-drawn 3rd wave targets 1.618
S&P 500 Elliott Wave Update – Breakout Signals the Start of Wave 3
The S&P 500 (SPX) is sending a very different message than the NASDAQ, and that distinction matters. While the NASDAQ has spent the past several sessions compressing into a triangle, SPX never formed a triangle structure at all. Instead, price traced out a completed corrective pattern and has now broken higher impulsively, suggesting something much more powerful is underway.
Triangles are continuation patterns that resolve with choppy, overlapping price action. What we are seeing in SPX today is the opposite. Today’s move is directional, decisive, and expanding, which immediately shifts the Elliott Wave interpretation. This is not a wave E breakout from a triangle — this has the characteristics of a Wave 3 launch.
Wave 3s are the engine of Elliott Wave theory. They are typically the strongest, longest, and fastest-moving waves in an impulsive sequence. They occur once corrections are complete and positioning is wrong-footed. That setup now appears to be in place for SPX.
The prior decline completed a corrective structure rather than an impulsive one. Overlapping price action, diminishing downside momentum, and failure to accelerate lower all pointed to exhaustion rather than trend continuation. Once that correction ended, SPX began advancing without hesitation, pushing through resistance levels that should have capped price if the market were still correcting.
That breakout is critical.
The lack of overlap on today’s advance, combined with expanding range and sustained upside pressure, aligns with the early stages of a Wave 3 rather than a simple relief rally. Importantly, SPX is not waiting for the NASDAQ to resolve its triangle — a common trait when leadership rotates and a broader impulsive phase begins.
Using Fibonacci extensions, we can project potential Wave 3 targets with clarity. Measuring the length of the first impulsive wave off the prior low and applying a 1.618 Fibonacci extension gives a target zone in the 7300–7400 range. This projection is textbook Elliott Wave behavior and represents a standard Wave 3 objective, not an extreme scenario.
Wave 3s often exceed expectations, but 7300–7400 is a reasonable and technically justified target based on structure alone.
It’s also important to recognize that Wave 3s rarely move in a straight line, but they do tend to make shallow, brief pullbacks that frustrate traders waiting for a “better entry.” If this is truly a Wave 3, dips should be bought, not feared, as long as price remains above the prior breakout support.
Failed bearish patterns and misidentified triangles frequently lead to powerful upside moves. Traders expecting further consolidation are often forced to chase as price accelerates. That dynamic is consistent with what we’re seeing now.
In summary:
SPX is not forming a triangle
Today’s breakout shows impulsive characteristics
Structure favors the start of Wave 3
7300–7400 is the primary Wave 3 target based on a 1.618 extension
If this count is correct, the market is transitioning from correction to expansion. Wave 3s don’t announce themselves quietly — they prove themselves through price. And right now, SPX price action is speaking loudly.