Technical Analysis – US 500 index corrects sharply from fresh all-time high

Anthony Charalambous, XM Investment Research Desk

US 500 index (Cash) recently plummeted from its new all-time top of 3,588, spiking below the 200-period simple moving average (SMA) until the 3,348 trough from August 20. It appears that negative pressures are abating, mirrored in the flattening of the Ichimoku lines and as price stalls.

Furthermore, the short-term oscillators also suggest some subsiding in the negative picture. The stochastic oscillator appears to be strengthening. The MACD’s decline, in the negative region, seems to have started to ease, while the RSI has bounced off the 20 level, improving marginally. Moreover, despite wavering slightly, the SMAs maintain a bullish bearing.

If sellers attempt to retake control of the market, initial limitations may occur from the 3,383 low ahead of the tough 200-period SMA at 3,370, and neighbouring key trough of 3,348 beneath. Should the price target additional depths, the index may encounter the 3,326 and 3,307 barriers from early August.

If buying interest intensifies, first resistance may arise from the lower band of the cloud and the 100-period SMA at 3,444. Pushing higher, the blue Kijun-sen line at 3,468 may hinder the price from challenging the 3,486 obstacle and adjacent 50-period SMA of 3,492, which resides at the cloud’s upper boundary. Gaining confidence, the price may rally for the 3,535 barrier before targeting the all-time high of 3,588 and the nearby 3,600 hurdle.

Overall, despite strong negative pressures, the index is managing to sustain a bullish bias above 3,348 and the 200-period SMA.