The US 100 cash index is consolidating after reaching 13,225, the highest level since August 19, 2022, fully recovering from the mid-March banking sector woes. The bulls might not be so upset about the current price action as they may accept that a small correction could set the stage for a new high afterwards, provided that the next low recorded is above the 11,850 area.
There are some key support levels on the way down starting with the 38.2% Fibonacci retracement level of the November 22, 2021 – October 13, 2022 downtrend at 12,852, and the 12,465-12,497 range set by the September 2, 2020 high and the 50-day simple moving average (SMA). Even lower, the 12,083-12,276 area appears to be a good area for the bulls to set up their defence.
The stochastic oscillator seems ready to signal a downwards move as it is currently hovering in the overbought territory, battling with its moving average. A potentially aggressive move lower by this indicator would infuse confidence in the bears to stage a proper correction. But they have to ignore the RSI trading above its 50-threshold and the Average Directional Movement Index (ADX) remaining on the sidelines at the moment.
Should the bulls manage to remain in control of the market, their first aim would be to retest the August 26, 2022 high at 13,206. Upon successfully clearing this level, the path is clear until the 13,600-13,721 range defined by the 50% Fibonacci retracement and August 16, 2022 high.
To sum up, the bulls managed to push the index higher amidst a difficult period. The current consolidation could work in their favour provided this delicate balance does not translate into a stronger downward move.
