We start from the weekly chart and the aim is to find the long-term trend and key support/resistance levels. The US500 cash index has enjoyed an impressive increase for almost 22 months from the March 2020 low to the all-time high of 4,818 in January 2022. Since then, the move has been on the bearish side, with the index recovering from the October 2022 low but still recording a 20% drop since January 2022, a so-called “bear market”.

The current price level hovers between the various simple moving averages (SMAs) employed here and it is currently battling with a key downward sloping trendline. The market has up to now shown an inability to remain above this trendline.

In the meantime, the Average Directional Movement Index (ADX) has dropped below the 25-threshold and signals a trendless market. This move also casts some doubt on the recent move by the stochastic oscillator. The almost vertical move lower in the latter, if matched by a similar price action in the US500, could open the door for a renewed bearish move with the bears aiming for the 3,501-3,588 area first.

The daily chart is the favorite among traders and hence deserves closer analysis. In addition to key levels, we focus on local peaks and troughs, and start to pay more attention to the SMAs and Fibonacci retracement levels.

On the back of the recent market developments, the US500 index is hovering above the December lows and the 23.6% Fibonacci retracement of the January 4, 2022 – October 13, 2022 downtrend. Since the October 13 low of 3,490, the US500 has been recording a series of higher highs and higher lows. Hence, a trough above the 3,763 area would keep this bullish structure alive.

The index tested the resistance posed by multiple SMAs as the ADX indicator continues to point to a muted bearish move matching the stochastic’s signal. A possible break of the 3,803 range could push the balance further in favour of the bears.

Long-term investors would be content with the weekly and daily analysis while very short-term trades would look at the 4-hour chart very briefly before delving into the 1-hour and 15-minute timeframes. For our purpose, the 4-hour seems sufficient to understand the shorter-term dynamics, identify the key levels for potential entry and exit in the market.

The US500 cash index has been on a downward trend since the early February high, touching a 2-month low on March 13. It is edging lower again today, but the overall technical picture does not look optimistic for the bears. The ADX does not seem impressed by this move and the stochastic oscillator appears to be finding a new balance, just above the 50-threshold.

The bears could gather some momentum from the series of lower highs and lower lows recorded in the US500 since late January. This bearish pattern could remain valid with a new lower low below the 3,809 level, which is currently the initial target of the bears. On the other hand, the bulls could potentially aim for the 38.2% Fibonacci retracement level at 3,906.

The process of examining multiple timeframes tends to be time-consuming, but it remains a better way of analyzing the market. The timeframes examined can be adjusted to the profile of each trader, but we believe that the analysis of the daily chart should feature in everyone's armory.

Regarding the US500 index analysed here:

• In the weekly chart, the battle with the downward trendline matters especially as the stochastic is pointing for a move lower. A bounce higher could signal the end of the bearish trend since January 2022.
• The US500 index is hovering above a key level as the combination of the ADX and the stochastic oscillator point to a muted bearish move.
• Momentum indicators appear balanced at this stage as the market battles with a key level, just ahead of a 2-month low.