The US 500 stock index (Cash) has been improving steadily lately, although it appears the progress in the price may receive a minor setback as increasing bearish forces are contesting the uptrend. The unwavering positive bias is being further endorsed by the rising simple moving averages (SMAs) however; the short-term oscillators are promoting a slightly different picture.
Currently, the short-term oscillators are demonstrating that positive momentum is slightly waning, validating the marginal pullback in the price. The MACD is far above the zero threshold and is tracking the red trigger line from below, while the RSI and the stochastic oscillator have both slid beneath their overbought levels of 70 and 80 respectively. Nonetheless, the odds are favouring a downwards price retracement as the RSI and the Stochastic oscillator are conveying negative price divergence and are holding below their restrictive diagonal lines.
If sellers manage to capitalise on the latest negative forces, early tough support could come at the mid-Bollinger band at 4,098, which has clearly provided effective footing lately. Should selling interest persevere and push past the congested lower wicks of 4,089 and 4,082, the lower Bollinger band – residing at 4,064 – could provide a securing base for the positive structure. However, if the bears produce a dive that breaks the 4,064 barrier, which happens to be the 23.6% Fibonacci retracement of the up leg from 3,853 to 4,129, the approaching 50-period SMA at 4,055 could impede a deeper retraction from testing the 38.2% Fibo at 4,024.
Alternatively, resistance may commence from the upper Bollinger band at 4,127 – reinforced by the all-time high at 4,129. Successfully overcoming these obstacles, the price may hit the 4,150 border before propelling towards the 4,200 mark.
Summarizing, price’s negative divergence could delay the indices’ efforts to reach new uncharted waters. Furthermore, a break below the support from the 4,000 handle to the 50.0% Fibo of 3,991 could jeopardise the indices latest gains.
