Technical Analysis – US 100 stock index starts a bullish correction in short-term


Melina Deltas, XM Investment Research Desk

The US 100 cash index has been making higher highs and higher lows through the end of March after it touched a more than 14-month low of 6,635, pausing the aggressive downward movement.  The technical indicators continue to send some bullish signals, suggesting that the positive momentum is not over yet.

The RSI, slightly above 50, is indicating that the market could strengthen a little bit in the short-term. Stochastics are not yet in oversold territory with the %K and %D positively aligned, creating a bullish crossover. Ichimoku indicators also raise bullish flags as the price holds above the Ichimoku cloud.

Should prices increase, immediate resistance could be found around the 50.0% Fibonacci retracement level of the down leg from 9,758 to 6,635 at 8,192. Then a leg above that level, the index could meet the 8,313 – 8,385 area before the focus shifts to the 61.8% Fibonacci at 8,557. Even higher, the door could open for further upside correction towards the 9,007 barrier.

However, if the market manages to lose some speed, the 200-day simple moving average (SMA) at 8,021 could offer nearby support ahead of the 7,964 obstacle. A significant close below the latter could break the 38.2% Fibonacci of 7,828 and the near-term rising trend line drawn from March 23, raising chances for further selling interest. In this case, prices could slip into the Ichimoku cloud and towards the 7,457 support.

In the short-term, the outlook remains positive since prices hold above all the moving average lines and the bullish cross between the 20- and the 40-day SMA stays in place. However, in the medium-term the index is still negative following the sell-off from 9,758.