Technical Analysis – US 500 index reclaims 4,500, threatening September highs

  • US 500 stock index posts fresh 2½ -month high

  • But advance seems to be taking a breather

  • Momentum indicators approach their overbought zones

The US 500 stock index (cash) has been staging an aggressive rally since it bottomed out in late October, piercing through the descending trendline that connects its recent lower highs. However, the uptrend appears to be on hold in the last few sessions as the short-term oscillators have approached overbought levels.

Should buyers attempt to push the price higher, immediate resistance could be found at the September peak of 4,540. Surpassing that zone, the index could ascend towards the 2023 high of 4,606. A break above that territory could open the door for the March 2022 high of 4,637.

On the flipside, if the price experiences a pullback, the September support of 4,430 could act as the first line of defence. Should that barricade fail, the bears could attack 4,342, which is the 23.6% Fibonacci retracement of the 3,486-4,606 upleg. Failing to halt there, the price may then challenge the 38.2% Fibo of 4,178.

Overall, the US 500 index has been facing strong upside pressures in the past three weeks, while the widening Bollinger bands are hinting at increased volatility. However, the price could enter a consolidation phase as the momentum indicators currently suggest that the advance is overdone.

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