- The US 100 index is edging lower today, testing the support of the 100-day SMA
- Bears are trying to recover part of their significant losses since the March 2023 lows
- The pullback could continue according to the momentum indicators
Recent market events have changed the sentiment in the US 100 cash index and the bears appear to have the upper hand at this juncture. The index is recording its third consecutive red candle as the bears are probably aiming to achieve a new lower low, below the August 18 trough at 14,553.
The bears are feeling strong at this stage as the momentum indicators are clearly on their side. The Average Directional Movement Index (ADX) has broken above its 25-threshold, signalling a muted bearish trend in the market, and the RSI has dropped below its 50-midpoint. More importantly, the stochastic oscillator is heading lower, towards its oversold territory, and building a good gap from its moving average.
Should the bears remain confident, they would try to overcome the 100-day simple moving average (SMA) at 14,887. They could then set their eyes on the busier 14,346-14,382 area, which is populated by the October 4, 2021 low and the 61.8% Fibonacci retracement level of the November 22, 2021 – October 13, 2022 downtrend. If successful in breaking this region, the next support area is expected at the April 29, 2021 high at 14,075.
On the flip side, the bulls are probably willing to take back control of the market. They would try to keep the US 100 cash index above the 14,887 level, and then gradually stage a rally towards the busier 15,258-15,411 range that is defined by the March 30, 2022 high, the 50-day SMA and the 78.6% Fibonacci retracement. Even higher, the key September 6, 2021 high at 15,708 will probably test the bulls’ determination.
To sum up, US 100 cash index bears continue their push lower, supported by the momentum indicators. However, the medium-term trend remains bullish and hence the bulls are probably preparing their response.