US 100 cash index remains above key area

The US 100 cash index continues to trade sideways, just above the busy 11,900-11,926 area populated by the 23.6% Fibonacci retracement level of the November 22, 2021 – October 13 downtrend and the 200-day simple moving average (SMA) respectively. This is the first decent correction following the 21% rally that was recorded during the January 6 – February 2 period, as the market is trying to find its next direction.

TheAverage Directional Movement Index (ADX) is pointing to a developing bearish trend while the RSI appears to be undecided at this juncture. The burden once again falls on the stochastic oscillator, which is showing early signs of stabilization above its oversold territory. Interestingly, a double top pattern has formed with the neckline at the 12,202 level and the primary target set at 11,500 area. The US 100 has broken through the neckline, confirming this pattern, but has moved modestly below it.

Should the bulls take the market reins, the first target would be at the 12,083-12,226 range set by multiple highs during 2020. Higher, the September 2, 2020 high of 12,465 could trouble the bulls before they potentially set their eyes on the 38.2% Fibonacci retracement of 12,852.

On the other hand, the primary goal for the bears remains the 11,900-11,926 area populated by the 23.6% Fibonacci retracement and the 200-day SMA. If successful in breaking this area, they could have a look at the 11,597-11,770 range where the 50- and 100-day SMAs reside.

To sum up, the US 100 cash index is moving sideways as the bears are testing the support set by the 11,900-11,926 range. A break below could potentially morph into a significant bearish move.  

About the author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics. Previously, she earned a bachelor of science in Economics from the University of Cyprus. Apart from foreign exchange markets, her research interests include the impact of International trade on labour markets and product development.