Technical Analysis – US 500 cash index trades a tad above a 2-month low
October 2, 2023 8:26 am
The US 500 cash index is moving sideways again today
The index bounced off the October 13, 2022 trendline
The momentum indicators could signal a reversal soon
The US 500 cash index is trading sideways today, hovering around the busy 4,270-4,310 area. The current downleg stopped at the long-term October 13, 2022 upward sloping trendline, allowing the bulls to temporarily gain some breathing space. However, the current bearish series of lower lows and lower highs remains intact.
In the meantime, the momentum indicators are showing increasing signs that a reversal could be on the cards soon. The Average Directional Movement Index (ADX) appears to have peaked, and it is potentially ready to start a downward move. Similarly, the RSI is gradually moving towards its midpoint after trading at its lowest level since September 2022. More importantly, the stochastic oscillator has edged above its moving average and now looks determined to move aggressively above its oversold territory.
Should the bears remain confident, they would aim to push the US 500 index below the 4,270-4,310 area, which is populated by the 61.8% Fibonacci retracement level of the January 4, 2022 – October 12, 2022 downtrend and the October 1, 2021 low. They could then come up against the key October 13, 2022 trendline, a tad above the 200-day simple moving average (SMA) at 4,215. Even lower, strong support is expected at the 4,106-4,154 region.
On the flip side, the bulls are keen on stopping the current correction. Should they successfully defend the 4,270-4,310 region, they could try to push the US 500 index above both the 100- and 50-day SMAs at 4,400 and 4,449 levels respectively. Higher, they could retest the 4,533-4,550 range that is defined by the 78.6% Fibonacci retracement level and the September 3, 2021 high.
To conclude, after a sizeable move the US 500 cash index bears’ dominance could be under threat, especially if the momentum indicators show further signs of a bullish reversal.
The US 500 cash index is moving sideways again today
The index bounced off the October 13, 2022 trendline
The momentum indicators could signal a reversal soon
The US 500 cash index is trading sideways today, hovering around the busy 4,270-4,310 area. The current downleg stopped at the long-term October 13, 2022 upward sloping trendline, allowing the bulls to temporarily gain some breathing space. However, the current bearish series of lower lows and lower highs remains intact.
In the meantime, the momentum indicators are showing increasing signs that a reversal could be on the cards soon. The Average Directional Movement Index (ADX) appears to have peaked, and it is potentially ready to start a downward move. Similarly, the RSI is gradually moving towards its midpoint after trading at its lowest level since September 2022. More importantly, the stochastic oscillator has edged above its moving average and now looks determined to move aggressively above its oversold territory.
Should the bears remain confident, they would aim to push the US 500 index below the 4,270-4,310 area, which is populated by the 61.8% Fibonacci retracement level of the January 4, 2022 – October 12, 2022 downtrend and the October 1, 2021 low. They could then come up against the key October 13, 2022 trendline, a tad above the 200-day simple moving average (SMA) at 4,215. Even lower, strong support is expected at the 4,106-4,154 region.
On the flip side, the bulls are keen on stopping the current correction. Should they successfully defend the 4,270-4,310 region, they could try to push the US 500 index above both the 100- and 50-day SMAs at 4,400 and 4,449 levels respectively. Higher, they could retest the 4,533-4,550 range that is defined by the 78.6% Fibonacci retracement level and the September 3, 2021 high.
To conclude, after a sizeable move the US 500 cash index bears’ dominance could be under threat, especially if the momentum indicators show further signs of a bullish reversal.
Related Posts: