HomeContributorsTechnical AnalysisUS 500 Cash Index Prepares for Wednesday's Event

US 500 Cash Index Prepares for Wednesday’s Event

  • The US 500 cash index tries to recover from Friday’s decent red candle
  • The bears are trying to increase the bearish pressure by aiming for a lower low
  • The momentum indicators could open the door to a further bearish correction

The US 500 cash index is in the green today as the market is anxiously waiting this week’s events. The bears are trying to exert their influence and stage another downleg, but most market participants are unlikely to be aggressive in their positioning at this juncture.

In the meantime, the momentum indicators are in waiting mode with the stochastic once again proving the most impatient one. Specifically, the Average Directional Movement Index (ADX) has stabilized below its 25-threshold, thus signaling a trendless market. Similarly, the RSI continues to hover purposelessly around its midpoint. Crucially though, the stochastic oscillator is trying to break below its moving average and infuse some confidence into the bears.

Should the bears decide to recoup another part of their losses, they would aim to push the US 500 index below the 100-day simple moving average at 4,378. If successful, they would then come up against a much tougher area. The 4,270-4,310 range is populated by the 61.8% Fibonacci retracement level of the January 4, 2022 – October 12, 2022 downtrend and the October 1, 2021 low. Even lower, strong support is expected at the 4,106-4,194 region.

On the flip side, the bulls are closely monitoring the price action. They appear determined to push the US 500 index above the 4,487 level and then retest the 4,533-4,550 range, defined by the 78.6% Fibonacci retracement level and the September 3, 2021 high. They would then have the chance of recording a new 2023 high and test their luck at the March 29, 2022 high at 4,637. 

To conclude, US 500 cash index bears are trying to take advantage of the quieter market conditions ahead of this week’s events. However, the bulls remain on high alert and ready to react to a protracted bearish move.

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