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Technical Analysis – Will the US 100 index come under profit-taking pressure?

Technical Analysis – Will the US 100 index come under profit-taking pressure?

The US 100 stock index (cash) opened June’s trading session on a neutral note, though the formation of a bearish doji at the top of the uptrend keeps feeding speculation that the latest remarkable rally has probably peaked.

The RSI and the stochastic oscillator are witnessing overbought conditions. Yet, with the former standing above 70 and the latter preserving a horizontal trajectory around 80, upside pressures could last a bit longer, especially if the 14,215 nearby support area stands firm.

In the event the price heads lower, the next destination could be the 13,885-13,750 zone, where the 20-day simple moving average is converging. The 13,550 territory may attract greater interest as the resistance line from February’s high and the ascending trendline from March’s low intersect each other at this point. Failure to pivot here could shift the spotlight on the 50-day SMA at 13,300.

Conversely, if the index pivots near 14,215, the bulls will target the 14,375 barrier, which overlaps with the 23.6% Fibonacci retracement of the 6,634-16,767 uptrend. An extension beyond the 14,529 top could stall somewhere between 14,795 and 15,000, while higher, the next obstacle could pop up around the constraining region of 15,275.

All in all, the US 100 index might be on the verge of a new bear run. A close below 14,215 could extend the pullback from May’s one-year high.  

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