Technical Analysis – Will the US 500 index put brakes to the bearish storm?
October 19, 2023 12:25 pm
The US 500 index follows a short-term negative path
Approaches key support area. Will the bulls take control?
The US 500 stock index (cash) is probably set for another bearish round on Thursday as the technical signals remain gloomy.
The RSI has fallen back below 50 and the stochastic oscillator is not yet at its oversold level of 20, indicating that sellers still have momentum.
In other discouraging signs, the shorter- and longer-term simple moving averages (SMAs) have negatively crossed each other after six months and another bearish cross seems to be coming with the 200-day SMA.
Wednesday’s session closed around the 20-day SMA and the 61.8% Fibonacci retracement of the 2021-2022 downtrend at 4,310. The support trendline from October 2022 and the 200-day SMA are within a breathing distance at 4,278 and 4,245 respectively. Therefore, sellers could stay on the sidelines until the price drops below that base. If it turns out that way, the sell-off could intensify towards 4,153 (50% Fibonacci).
Should the price bounce off its 20-day SMA, it may initially take a breather around its 50-day SMA before heading for the short-term resistance trendline. The descending line has been navigating the downtrend since July’s peak and a bullish break above it is expected to encourage stronger buying towards the 4,533 resistance zone. Then, the bulls might push for an uptrend resumption above the 2023 ceiling of 4,600 and the key barrier of 4,645 taken from March 2022.
Overall, the short-term risk for the US 500 index is still on the bearish side, but sellers will need to claim the 4,245-4,278 area to stay in power.
The US 500 index follows a short-term negative path
Approaches key support area. Will the bulls take control?
The US 500 stock index (cash) is probably set for another bearish round on Thursday as the technical signals remain gloomy.
The RSI has fallen back below 50 and the stochastic oscillator is not yet at its oversold level of 20, indicating that sellers still have momentum.
In other discouraging signs, the shorter- and longer-term simple moving averages (SMAs) have negatively crossed each other after six months and another bearish cross seems to be coming with the 200-day SMA.
Wednesday’s session closed around the 20-day SMA and the 61.8% Fibonacci retracement of the 2021-2022 downtrend at 4,310. The support trendline from October 2022 and the 200-day SMA are within a breathing distance at 4,278 and 4,245 respectively. Therefore, sellers could stay on the sidelines until the price drops below that base. If it turns out that way, the sell-off could intensify towards 4,153 (50% Fibonacci).
Should the price bounce off its 20-day SMA, it may initially take a breather around its 50-day SMA before heading for the short-term resistance trendline. The descending line has been navigating the downtrend since July’s peak and a bullish break above it is expected to encourage stronger buying towards the 4,533 resistance zone. Then, the bulls might push for an uptrend resumption above the 2023 ceiling of 4,600 and the key barrier of 4,645 taken from March 2022.
Overall, the short-term risk for the US 500 index is still on the bearish side, but sellers will need to claim the 4,245-4,278 area to stay in power.
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