Technical Analysis – US 500 index tiptoes to fresh all-time high

The US 500 stock index (Cash) has ticked to a new all-time high of 4,289, basically a step or two higher from its June 15 level of 4,267. The firm simple moving averages (SMAs) are shielding the uptrend and are steering the price towards the 4,323 level, which happens to be the 176.4% Fibonacci extension of the down leg from 3,396 until 2,183.

The Ichimoku lines have converged and are not reflecting growing positive momentum at the moment. The short-term oscillators are sustaining a positive tone however; it will be interesting to see if this holds up as the index nears the 176.4% Fibo extension. The MACD has peeped marginally above its mostly horizontal red trigger line, while the RSI appears lethargic in the bullish territory. The stochastic lines are far above the 80 level but the %K line is showing signs that positive momentum is currently inhibited.

If positive impetus picks up, early upside limitations may emanate from the 176.4% Fibo of 4,323. Should this border fail to suppress bullish pressures, the index could steer for the 4,400 obstacle. In the event the index sustains its incline, traders’ focus may then turn to the 4,500 and 4,600 barriers respectively.

If the index starts to fade or deflects off the 176.4% Fibo of 4,323, sellers may encounter initial support from the 50-day SMA at 4,201. Next tough downside defences may evolve from the zone between the nearby 4,137 trough and the Ichimoku cloud’s lower surface at 4,049. Diving beneath the cloud could open the door for a retest of the 4,000 handle.

In conclusion, the US 500 index is sustaining a broader bullish bias above the SMAs, while a dip underneath the cloud may signal a deeper price retracement.

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