Technical Analysis – US 500 index faces headwinds as advances engage

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.

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