Technical Analysis – US 500 index preserves positive objectives

Anthony Charalambous, XM Investment Research Desk

US 500 stock index (Cash) seems to be aiming its course towards unfamiliar territory above the all-time high of 3,396.64. The price has been steadily heading higher after finding traction again at the 100-period simple moving average (SMA) and the Ichimoku cloud in previous sessions. Aiding this progression from the 2,995 level are the advancing Ichimoku lines and the positive bearing in the SMAs.

That said, the index’s positive momentum has weakened slightly as suggested in the short-term oscillators. The MACD, fairly sturdy in the positive section, has slipped below its red trigger line, while the RSI hovers under the 70 mark. Additionally, the %K line appears to be pausing in the overbought zone.

Immediately constricting upside moves towards the all-time high of 3,396.64 is the five-and-a-half-month obstacle of 3,362. If buying interest manages to breach the historic top, resistance may develop from the 3,415 level, that being the 161.8% Fibonacci extension of the down leg from 3,233 to 2,936. Further gains may then encounter the 176.4% Fibo extension of 3,460 and the 3,500 handle overhead.

Otherwise, if sellers steer below the red Tenkan-sen line, friction could commence from the blue Kijun-sen line at 3,321 and the 3,307 low. Diving beneath, the 50- and 100-period SMAs at 3,295 and 3,270 respectively, and the cloud underneath may prove hard to get through. Piercing below, the 3,198 to 3,219 support section – which encompasses the 200-period SMA – may attempt to halt the plunge. Should it fail to do so, the 3,105 to 3,127 region of troughs may come in defense of the positive picture.

Summarizing, the short-to-medium-term timeframe retains its bullish demeanour. A violation of the all-time high of 3,396.62 would reinforce the bias, while a return below 2,995 would boost negative sentiment.