Technical Analysis – US 500 index bounces off 23.6% Fibonacci
August 21, 2023 1:27 pm
The US 500 stock index (cash) has been in a steady decline since its peak at the 16-month high of 4,606 on July 27. However, the price seems to be temporarily halting its retreat after encountering strong support near 4,342, which is the 23.6% Fibonacci retracement of the 3,486-4,606 upleg.
Despite the latest bounce, the short-term oscillators continue to reflect downside risks. Specifically, the MACD is extending its decline below both zero and its red signal line at its lowest levels since March, while RSI ticked up but remains deep in the negative zone.
Should the rebound resume, the price could ascend towards the July resistance of 4,460, which coincides with the 50-day simple moving average (SMA). Conquering this barricade, the bulls may attack the 2023 peak of 4,606. A break above that zone could trigger an advance towards the March 2022 high of 4,637.
Alternatively, if the bearish pressures persist, the 23.6% Fibo of 4,342 could be the first barrier for sellers to claim. Failing to halt there, the price could challenge the 38.2% Fibo of 4,178, which also acted as resistance in February. Even lower, the 50.0% Fibo of 4,046 might provide downside protection.
In brief, the US 500 index has been experiencing a downside correction, which appears to be running out of steam. Can the bulls fight back and extend the recent bounce?
The US 500 stock index (cash) has been in a steady decline since its peak at the 16-month high of 4,606 on July 27. However, the price seems to be temporarily halting its retreat after encountering strong support near 4,342, which is the 23.6% Fibonacci retracement of the 3,486-4,606 upleg.
Despite the latest bounce, the short-term oscillators continue to reflect downside risks. Specifically, the MACD is extending its decline below both zero and its red signal line at its lowest levels since March, while RSI ticked up but remains deep in the negative zone.
Should the rebound resume, the price could ascend towards the July resistance of 4,460, which coincides with the 50-day simple moving average (SMA). Conquering this barricade, the bulls may attack the 2023 peak of 4,606. A break above that zone could trigger an advance towards the March 2022 high of 4,637.
Alternatively, if the bearish pressures persist, the 23.6% Fibo of 4,342 could be the first barrier for sellers to claim. Failing to halt there, the price could challenge the 38.2% Fibo of 4,178, which also acted as resistance in February. Even lower, the 50.0% Fibo of 4,046 might provide downside protection.
In brief, the US 500 index has been experiencing a downside correction, which appears to be running out of steam. Can the bulls fight back and extend the recent bounce?
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