Technical Analysis – Has the US 100 index rally run its course?
- US 100 index trades a tad below its all-time high
- The US election rally appears to have fizzled out
- Momentum indicators remain bullish at this stage
The US 100 cash index is moving sideways again today, as the rally since the US presidential election date appears to have concluded. A new all-time high has been recorded, but the bulls have failed, up to now, to push the US 100 index above the long-term January 6, 2023 trendline. Market participants are probably taking a breather and preparing for this week’s key US data releases. Meanwhile, the bullish trend since the August 5 low remains firmly in place, supported by a series of higher highs and higher lows.
The momentum indicators are comfortably bullish at this juncture. More specifically, the Average Directional Movement Index (ADX) is edging higher and hence signalling a strengthening bullish trend in the US 100 index. Similarly, the RSI is hovering above its midpoint, confirming the recent bullish pressure. More importantly, the stochastic oscillator has jumped back inside its overbought area (OB). It can stay there for a while before signalling its intention for a bearish breakout.
Should the bulls remain confident, they could try to lead the US 100 index above January 6, 2023 trendline, opening the door to another all-time high. The 21,500 appears to be the first target, with the 200% Fibonacci extension level of the November 22, 2021 – October 13, 2022 downtrend positioned just north of 23,000.
If the bears manage to regain the market reins, they could try to keep the US 100 index below the January 6, 2023 trendline and then push it towards the 20,683-20,772 area. This region is populated by the 161.8% Fibonacci extension level, the July 11, 2024 high and it is the point that the August 5, 2024 and October 26, 2023 ascending trendlines currently cross. A move below this busy area will open the door to a test of the support set by the 50- and 100-day simple moving averages (SMAs) at the 19,722-19,978 region.
To sum up, the US 100 index is trading sideways as market participants are potentially preparing for Wednesday’s US CPI release that could result in increased volatility and potentially complement the current bullish trend.
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