US 500 Index – All Time Highs Back in SightFresh optimism regarding trade negotiations between the US and China, coupled with confirmation on Friday that the US labour market is cooling down slowly and not indicating an imminent US recession, has seen the US 500 index open this morning at 4 month highs, bumping up against the psychological 6000 again, with its all time peak of 6144 (February 19th) back in sight.
Looking forward, this could be a pivotal week for the US 500, with a variety of risk events for traders to consider, all of which may have the potential to impact the direction of risk sentiment into the Friday close.
First up, later today, traders will be eagerly awaiting updates from the second round of trade talks between US and Chinese trade teams, who are tasked with defusing tensions regarding the supply of rare earth minerals and advanced technology.
Then, on Wednesday (CPI 1330 BST) and Thursday (PPI 1330 BST) the next round of US inflation updates for May are released. These could be relevant to traders who have become more sensitive to potential price rises due to the impact of President Trump's trade tariffs. Any surprise deviations from expectations in either of these releases could see an increase in US 500 index volatility.
Putting this all together with any fresh reports outlining progress on trade deals between the US and Japan or the EU, and it could be a volatile week in store. With this in mind, it can be helpful to consider the technical indicators and trends.
Technical Update: Focus on the Bollinger Mid Average
While some may have argued for a slowing in upside momentum of the recent US 500 index advance, price weakness has continued to be limited in both time and extent.
Importantly, as the chart above shows, when short term setbacks in price have recently materialised, it has been the rising Bollinger mid-average that has marked a support focus.
This maintains the potential of a more constructive picture and positive price trend, where buyers have been happy to pay a higher price each time that weakness is seen, and have been able to push the index above previous peaks in price, to new recovery highs.
Of course, there is no guarantee this pattern of higher highs and higher lows in price will extend further, but traders may well be focusing on this type of pattern as having the potential to lead to a more sustained phase of price strength.
What are the potential support and resistance levels that traders may be watching this week for clues to the direction of the next possible price move?
Potential Resistance Levels:
Further evidence that a positive trend in price could still be in place came on Friday, as a new recovery price high at 6017 was posted.
Traders may now be watching how a previous price high at 6049, which was posted on February 24th is defended, as closing breaks may see further attempts to push to higher levels. Such moves could then lead to further price strength towards 6144, the February 19th all-time high.
Potential Support Levels:
Having held and turned price activity higher over previous tests, it may well still be the rising Bollinger mid-average, which currently stands at 5916 that represents a possible support focus this week.
Closes below this level while not confirmation of a more extended phase of price weakness, may see a deeper decline to test 5842, the May 30th session low, even on to the 5742 level, which is equal to the low posted on May 23rd.
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