Technical Analysis – US 500 index struggles to maintain positive picture around 5-month high

Anthony Charalambous, XM Investment Research Desk

US 500 index (Cash) is encountering strong resistance around the recent five-month high of 3,292.24. The price appears to have somewhat stalled for now, something also suggested by the flattened Ichimoku lines.

The short-term oscillators further reflect the pause in positive momentum. The MACD, in the positive region, continues to float just below its horizontal red trigger line while the RSI is holding in bullish territory. Additionally, the stochastic lines are rising in overbought territory, the RSI is pointing slightly upwards and the simple moving averages (SMAs) are maintaining a positive slope, thus the index may soon resume its climb.

To the upside, immediate tough resistance is derived from the 3,292.24 high until the 3,304 barrier. If the bulls manage to clearly conquer this significant border, the index could revisit the all-time high of 3,396.64, while extra gains may target the 3,500 handle.

If sellers deny further appreciation in the index, initial support may occur at the red Tenkan-sen line at 3,243 and the 3,197 low. Should selling interest persist, the 50-day SMA at 3,151, coupled with blue Kijun-sen line and the 3,115 barrier underneath, may attempt to halt the decline. Retracing into the Ichimoku cloud, the 200-day SMA at 3,060 and the 3,030 level, which is the 23.6% Fibonacci of the 2,183.95 – 3,292.24 up leg, may be challenged ahead of the cloud’s lower surface, in-line with the 2,994 trough.

Overall, the short-to-medium-term outlook remains positive above the cloud and the 3,115 trough, while a decisive break above 3,304 could reignite momentum in the bullish structure.