Technical Analysis – US 500 index faces headwinds as advances engage
- Anthony Charalambous
The US 500 stock index (Cash) is being curbed by the Ichimoku cloud after the index unearthed positive traction around a 13½-month low of 3,858, just shy of the March 2021 trough of 3,853. The diving simple moving averages (SMAs) are defending the more than six-week decline in the benchmark index.
Currently, the Ichimoku lines are reflecting the struggle buyers are encountering to extend push beyond the cloud. This is also being mirrored in the short-term oscillators. The MACD and the stochastic oscillator are promoting further upside impetus, while the RSI is implying positive momentum has become weak.
As things stand, the rebound in the index is facing upside constraints from the cloud and the resistance area between the 4,098 barrier and the falling 100-period SMA at 4,122. In the event the price overcomes the cloud, the 4,155 border, which is the 38.2% Fibonacci retracement level of the down leg from 4,638 until 3,858, could hinder additional gains in the index. Yet, persistent bullish backing may drive the price to test the 50.0% Fibo of 4,247 prior to confronting the dipping 200-period SMA at 4,297, adjacent to a key resistance section linking the 4,306 high with the 61.8% Fibo of 4,339.
Alternatively, if the cloud dampens positive forces, a nearby fortified support region from 4,056 until the 50-day SMA at 4,030 could test sellers’ efforts to reignite the bearish trajectory. However, a successful push lower may bring into play the 3,955-4,000 boundary before sellers navigate for the 13½-month trough of 3,858. Sinking past the 3,853 border may rekindle negative tendencies of a deeper correction with the bears aiming for the 3,818 and 3,798 lows from the early part of March 2021.Summarizing, the US 500 index is suggesting a snag in risk-appetite. For sentiment to bolster, the price would need to steer north of the cloud.
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.