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US 500 Index holds neutral bias

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Over the last couple of months the US 500 index has established and traded within a trading range roughly around the key level of 2,025, whilst moving down to support at 1,980 and up to 2,068. Over the last couple of weeks or so the index has moved very strongly pushing through the 50-period SMA and the 200-period SMA on the daily chart. Currently, the index is struggling to break above the strong resistance level of 2,068 keeping the negative momentum intact since the index formed a lower high (failure swing).

On the downside, the 2,026 is a key significant level as it includes the 50-period SMA, as well as the 200-period SMA on the daily chart. This level continues to play a role in providing some support inside the channel formation.

The medium-term outlook remains bullish, but the Stochastic oscillator suggest that we may not be able to push much higher from where we are right now as it crossed above the 80 level. However, as long as the price is trading below the 2,093, the picture for the index remains bearish. Going forward, for confirmation of the trend reversal, we will need to see a break below the 1,968 – 1,980 zone.

Both the MACD and the RSI lie near their neutral levels confirming the validity of the formation, while the ADX is moving near the 20 level, reaffirming the disagreement between investors.

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