Technical Analysis – US 500 index’s advances under pressure


Anthony Charalambous, XM Investment Research Desk

US 500 stock index (Cash)  is struggling to overcome the 2,935 level, that being the 61.8% Fibonacci retracement of the down leg from the all-time high of 3,396.64 until the 2,183.95 low, after acquiring some footing on the Ichimoku cloud’s upper band at 2,791.

The positive tone of the Ichimoku lines and the short-term oscillators further back an advancing view. The MACD, in the positive section, is holding just above its red trigger line, while the RSI is creeping higher from its neutral 50 mark. Additionally, the rising stochastic %K line has just breached the 80 level, endorsing more advances for now. However, traders need to be cautious of the recent bearish crossover of the 200-day simple moving average (SMA) by the 100-day one, signalling a downside tendency.

Should buyers manage to push over the 61.8% Fibo of 2,935, strong resistance could originate from the nearby 2,973 high and the coupled 100- and 200-day SMAs overhead, around 3,004. Conquering these obstacles, the price may shoot for the 76.4% Fibo of 3,111 and the adjacent peak of 3,138 ahead of the 3,214 inside swing low of January 31.

If sellers pivot the price, initial support could surface from the red Tenkan-sen line at 2,876 ahead of a key low – which happens to reside at the cloud’s upper band and the 50.0% Fibo of 2,791. Dipping into the cloud, another important point is the 2,720 support, sandwiched by the 50-day SMA and the blue Kijun-sen line. Another shove lower may meet the 38.2% Fibo of 2,648 coinciding with an inside swing high.

Summarizing, the short-term bias is bearish below 2,973 and the 100- and 200-day SMAs and a move below 2,791 could reinforce this view. However, a break above 3,004 would return confidence in the move up from the 2,183.95 low.