Technical Analysis – US 500 index prints bearish shooting star candle at fresh record high


Christina Parthenidou, XM Investment Research Desk

The US 500 stock index seems to have formed a bearish shooting star candle on Friday in the same day it unlocked a fresh record high of 3,251 and it remains to be seen whether the bears will take the lead in the coming sessions.

Overbought conditions have already been detected as the RSI has been flattening above 70 for more than a week now and the Stochastics are turning south after posting a bearish cross above 80. The slowdown in the MACD further increases the case for a downside correction or at least for some stabilization.

Traders would like to see the price retreating below the previous peak of 3,157 and the ascending trendline to reduce exposure in the market. Falling below the December trough of 3,069 and more importantly beneath the 3,026 restrictive level, the door would open for the 200-day simple moving average (SMA) currently around the 2,958 barrier.

In case the bulls dominate the market, they may next look for fresh all-time highs somewhere between 3,300-3,350.