- US 100 index exhibits bearish tendencies but stabilizes near 50-SMA
- Technical risk is two-sided as Powell prepares for his Jackson hole speech( 14:00 GMT)
- Bulls hope for a close above 19,880; bears need a drop below 19,350
The US 100 stock index came under pressure on Thursday after a downward revision in the US non-farm payrolls revived fears of a slowing US economy.
Fortunately, the 50-day simple moving average (SMA) prevented a further decline below 19,520, but the clear bearish engulfing candlestick pattern created at the top of the latest bullish wave both in the daily and four-hour charts warns that the selling wave might have more room to run.
Meanwhile the technical indicators have not confirmed a bearish bias yet. The RSI remains comfortably above its 50 neutral mark and the MACD continues to rise within the positive region, questioning the overbought signals coming from the stochastic oscillator.
Nevertheless, if sellers drive the price below the 50-day SMA, they may instantly reach the channel’s lower boundary seen at 19,350. A steeper decline below the formation could cease somewhere between the support trendline from October at 19,080 and the 20-day SMA at 18,955. If this floor cracks as well, the index could crash into the 18,400-18,586 zone.
Otherwise, should the index set a strong footing near its 50-day SMA, the bulls might again fight for a close above the 19,880-20,000 region. A successful break higher could pick up steam towards the channel’s upper band near 20,350, and then up to the all-time high of 20,771. The next mission could target the 21,000 psychological mark in the uncharted territory.
In brief, the US 100 index is in a state of neutrality and is looking for a new direction either below 19,350 or above 19,880.
