Technical Analysis – US100 index bulls wait above symmetrical triangle

Christina Parthenidou, XM Investment Research Desk

US100 stock index looks to be filling a symmetrical triangle in the daily chart as the market managed to register another higher low this month at 7,460 but it remained below the resistance line drawn from the 8,033 record high.

According to the RSI and the MACD an upward move is more likely than a downside correction as both indicators are pointing up in the bullish area. Questions, however, remain about whether the bulls are strong enough to close above the downward-sloping line, potentially attracting fresh buying interest.

If a rally above the triangle happens, with the price piercing the September high of 7,976 too, then the 8,033 top would come into consideration. Positive momentum could further peak up steam, first up to 8,100 and then towards 8,300 if the latter fails to hold.

In the negative scenario, a reversal to the downside would bring the lower line of the triangle, which is placed near the 200-day simple moving average (SMA) and the 23.6% Fibonacci of the upleg from 5,848 to 8,033, into focus. Should the sell-off get more legs, the 38.2% Fibonacci of 7,195 could be the next target, while the 50% Fibonacci of 6,933 may also prove a tough obstacle.

Meanwhile in the medium-term picture, US100 is in neutral mood, sliding sideways within the 8,033-7,195 region. Any violation at these points could direct the market accordingly.

Summarizing, US100 needs to climb above the symmetrical triangle to confirm bullish bias. If the price manages to forcefully pierce the 8,033 record high, the positive sentiment would also stretch to the medium-term timeframe.