Technical Analysis – US500 Index plots new high, flirts with 138.2% Fibonacci extension

Anthony Charalambous, XM Investment Research Desk

US 500 stock index continues to gain ground after the push up on October 3, showing no definitive signs of retreating as it clocks yet another fresh all-time high of 3,128.12. The price has distanced itself above the Ichimoku cloud, as has the Tenkan-sen done above the Kijun-sen line, backing the positive picture. Furthermore, the ADX also implies a strong uptrend is in place.

The short-term oscillators reflect some easing in positive momentum and could warrant a nearing pullback. The MACD, is deep in the positive zone but only just above its red trigger line, while the RSI barely in the overbought region, has turned down. However, the upward slopes in the Ichimoku lines and all simple moving averages (SMAs) still support an improving positive sentiment.

If the buyers reemerge and manage to drive the index above 3,123, which is the 138.2% Fibonacci extension of the down move from 3,027 to 2,777, the price could rally to test the 161.8% Fibo of 3,183. Overrunning this obstacle too could push the price to test even the 176.4% Fibo extension of 3,219.

To the downside, immediate support could come from the 3,102 level and nearby line, while lower the 3,065 low could hinder the drop to the Kijun-sen line and swing low of 3,022 from October 31. Next, the 50-day SMA at 3,008 could be challenged ahead of the support region of 2,975 to 2,959, with the former also being close to where the 100-day SMA lies.

In brief, the short-term still holds bullish above 3,027 – with the index currently encountering some restrictive pressure – while a break below this level could turn the bias back to neutral.