Technical Analysis – US 100 cash index at new high for 2023 but correction is overdue
June 6, 2023 8:28 am
The US 100 index is trading a tad above the 14,346-14,382 range, close to the highest level for almost 14 months. The pace of the recent rally remains very aggressive, pleasing the bulls but opening the door for a sizeable correction towards the March 13, 2023 upward sloping trendline.
The bulls are probably feeling confident the rally will continue since the Average Directional Movement Index (ADX) is currently trading at its highest level since November 2021, confirming the aggressive upleg. However, any sign of the ADX moving sideways would be a hint that the rally might have reached its peak.
In addition, the stochastic is flashing red as the higher highs in the US 100 index have not been met by similar prints by this indicator. A potential break of the stochastic below both its moving average and overbought territory will most likely cause the first strong correction since the March 2023 banking sector-induced downleg.
Should the bears feel encouraged by these potential signals, they would try to clear the 14,346-14,382 range and the April 29, 2021 high at 14,075. These short-term wins could help them build momentum into tackling the busier 13,600-13,721 range, which is defined by the August 16, 2022 high and the 50% Fibonacci retracement level of the November 22, 2021 – October 13, 2022 downtrend respectively.
On the other hand, if the bulls remain committed to making higher highs, they would try to keep the US 100 index above the 14,346-14,382 area and then target the key 15,258-15,411 range, populated by the March 30, 2022 high & 78.6% Fibonacci retracement. Even higher, the September 6, 2021 high of 15,708 awaits them.
To sum up, the pace of the recent US 100 index rally is pleasing the bulls, but a correction looks overdue and could prove more significant than currently envisaged by the bears.
The US 100 index is trading a tad above the 14,346-14,382 range, close to the highest level for almost 14 months. The pace of the recent rally remains very aggressive, pleasing the bulls but opening the door for a sizeable correction towards the March 13, 2023 upward sloping trendline.
The bulls are probably feeling confident the rally will continue since the Average Directional Movement Index (ADX) is currently trading at its highest level since November 2021, confirming the aggressive upleg. However, any sign of the ADX moving sideways would be a hint that the rally might have reached its peak.
In addition, the stochastic is flashing red as the higher highs in the US 100 index have not been met by similar prints by this indicator. A potential break of the stochastic below both its moving average and overbought territory will most likely cause the first strong correction since the March 2023 banking sector-induced downleg.
Should the bears feel encouraged by these potential signals, they would try to clear the 14,346-14,382 range and the April 29, 2021 high at 14,075. These short-term wins could help them build momentum into tackling the busier 13,600-13,721 range, which is defined by the August 16, 2022 high and the 50% Fibonacci retracement level of the November 22, 2021 – October 13, 2022 downtrend respectively.
On the other hand, if the bulls remain committed to making higher highs, they would try to keep the US 100 index above the 14,346-14,382 area and then target the key 15,258-15,411 range, populated by the March 30, 2022 high & 78.6% Fibonacci retracement. Even higher, the September 6, 2021 high of 15,708 awaits them.
To sum up, the pace of the recent US 100 index rally is pleasing the bulls, but a correction looks overdue and could prove more significant than currently envisaged by the bears.
Related Posts: