Technical Analysis – US 500 index might hit lower levels after Tuesday’s slump
May 1, 2024 3:27 pm
US 500 index exposed to more downside after Tuesday’s pullback
Short-term risk is negative. Will the bears crack the floor at 4,965-5,000?
The US 500 stock index (cash) traded flat at the start of the US open as investors waited for the FOMC policy announcement today at 18:00 GMT. Despite the current muted tone in the market, the short-term outlook does not look promising, especially after the price got hammered near the resistance line from April’s record high for the fourth time on Tuesday.
The 23.6% Fibonacci retracement of the October-April uptrend is within a breathing distance at 5,000, while the 100-day exponential moving average (EMA) is also in the neighborhood at 4,965, ready to limit any additional downside corrections. Yet, the RSI and the stochastic oscillator are clearly within the bearish area and cannot warrant an upside reversal. Hence, the base scenario is for an extension lower and particularly towards the 38.2% Fibonacci mark of 4,830. The 200-day simple moving average (SMA) could come next into view at 4,764 ahead of the 50% Fibonacci of 4,690.
On the upside, the bulls will have to pierce through the shorter-term EMAs and the descending line at 5,094, and then cross back above the broken long-term ascending line at 5,190 in order to access the record high of 5,280. If the uptrend resumes above the latter, the price might print a new higher high within the 5,393-5,463 caution zone.
In a nutshell, yesterday’s aggressive pullback in the US 500 index might be a warning sign that the market could experience more downside in the short-term. Hence, the focus today might be on the 4,965-5,000 support area.
US 500 index exposed to more downside after Tuesday’s pullback
Short-term risk is negative. Will the bears crack the floor at 4,965-5,000?
The US 500 stock index (cash) traded flat at the start of the US open as investors waited for the FOMC policy announcement today at 18:00 GMT. Despite the current muted tone in the market, the short-term outlook does not look promising, especially after the price got hammered near the resistance line from April’s record high for the fourth time on Tuesday.
The 23.6% Fibonacci retracement of the October-April uptrend is within a breathing distance at 5,000, while the 100-day exponential moving average (EMA) is also in the neighborhood at 4,965, ready to limit any additional downside corrections. Yet, the RSI and the stochastic oscillator are clearly within the bearish area and cannot warrant an upside reversal. Hence, the base scenario is for an extension lower and particularly towards the 38.2% Fibonacci mark of 4,830. The 200-day simple moving average (SMA) could come next into view at 4,764 ahead of the 50% Fibonacci of 4,690.
On the upside, the bulls will have to pierce through the shorter-term EMAs and the descending line at 5,094, and then cross back above the broken long-term ascending line at 5,190 in order to access the record high of 5,280. If the uptrend resumes above the latter, the price might print a new higher high within the 5,393-5,463 caution zone.
In a nutshell, yesterday’s aggressive pullback in the US 500 index might be a warning sign that the market could experience more downside in the short-term. Hence, the focus today might be on the 4,965-5,000 support area.
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