Technical Analysis – Is the US 100 cash index on the brink of a correction?
July 11, 2023 7:25 am
The US 100 index is trading sideways today as a double top pattern appears to be forming. This bearish structure will become valid if the 14,687 neckline is broken, with an assumed target at the 14,000 area. If this move materializes, it will be the first decent correction since the March 2023 banking sector-induced sell-off.
The momentum indicators are probably leaning towards a correction as well. The Average Directional Movement Index (ADX) remains a tad above its 25-threshold and thus signalling a mild bearish trend. More importantly, the stochastic oscillator has broken below both its overbought territory and moving average, sending the message that there is a growing bearish pressure in the market.
Should the bears feel more confident, they would try to stage a sell-off towards the March 13, 2023 upward sloping trendline. The next support area is expected at the 14,346-14,368 range, defined by the October 4, 2021 low and the 50-day simple moving average (SMA). Even lower, the April 29, 2021 high at 14,075 coincides with the double-top pattern’s target.
On the flip side, the bulls are taking a breather after an aggressive rally but remain committed to making higher highs. They could try to finally push the US 100 index above the 15,258-15,411 range set by the March 30, 2022 high and the 78.6% Fibonacci retracement level of the November 22, 2021 – October 13, 2022 downtrend. Even higher, the September 6, 2021 high of 15,708 might not trouble the bulls much, but it will open the door for the all-time high of 16,767.
To sum up, US 100 index bulls remain in control, but a developing bearish pattern is gradually opening the door to a sizeable correction.
The US 100 index is trading sideways today as a double top pattern appears to be forming. This bearish structure will become valid if the 14,687 neckline is broken, with an assumed target at the 14,000 area. If this move materializes, it will be the first decent correction since the March 2023 banking sector-induced sell-off.
The momentum indicators are probably leaning towards a correction as well. The Average Directional Movement Index (ADX) remains a tad above its 25-threshold and thus signalling a mild bearish trend. More importantly, the stochastic oscillator has broken below both its overbought territory and moving average, sending the message that there is a growing bearish pressure in the market.
Should the bears feel more confident, they would try to stage a sell-off towards the March 13, 2023 upward sloping trendline. The next support area is expected at the 14,346-14,368 range, defined by the October 4, 2021 low and the 50-day simple moving average (SMA). Even lower, the April 29, 2021 high at 14,075 coincides with the double-top pattern’s target.
On the flip side, the bulls are taking a breather after an aggressive rally but remain committed to making higher highs. They could try to finally push the US 100 index above the 15,258-15,411 range set by the March 30, 2022 high and the 78.6% Fibonacci retracement level of the November 22, 2021 – October 13, 2022 downtrend. Even higher, the September 6, 2021 high of 15,708 might not trouble the bulls much, but it will open the door for the all-time high of 16,767.
To sum up, US 100 index bulls remain in control, but a developing bearish pattern is gradually opening the door to a sizeable correction.
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