US 500 Index – Facing a Key Test of Trader SentimentUS 500 IndexPEPPERSTONE:US500PepperstoneThe US 500 index is facing a major sentiment test. Despite posting a strong rebound from yesterday’s initial 1.5% drop to 6760, to finish the day with a small 0.15% gain at 6875, the index is back down 0.75% again today, trading at 6825 at the time of writing (0630 GMT). The decision for US and Israeli forces to conduct coordinated attacks on selective targets across Iran that started on Saturday and are currently still on-going, operations that resulted in the death of Iran’s Supreme leader Ayatollah Ali Khamenei, have impacted the flow of oil and gas through the Strait of Hormuz, and retaliatory attacks by Iran on neighboring oil producers have helped to keep oil prices elevated stoking fears of higher inflation, a hit to global trade and corporate profits. The index was already facing downside pressure after Nvidia’s strong Q4 results, released late on Wednesday 25th February failed to impress investors. The narrative for AI has seemingly evolved from a need to gain exposure to anything AI, to worries regarding when the colossal capital expenditure in the space may start to payoff in terms of increased revenue, to serious concerns about the destructive impact of Artificial Intelligence on the way that many companies currently generate their revenue. Looking forward, the immediate focus may remain on the developing situation in the Middle East. While traders may have initially anticipated the conflict to be over quite quickly, overnight comments from President Trump have indicated it may take much longer, especially given the determination of the ruling regime to resist US and Israeli attacks by refusing to negotiate. How these events evolve across the remainder of this week could have a lasting impact on sentiment moving through the first quarter of 2026. Technical Update: Choppy Sideways Activity Extends US 500 price action has remained choppy and sideways throughout 2026, reflecting an ongoing balance between buyers and sellers. A decisive directional move may only emerge once one side gains control, allowing a clear closing breakout either to the upside or the downside. As the chart above shows, the current sideways range is defined by 6760 on the downside, which is the 50% Fibonacci retracement, and 7004 to the upside, which matches the 38.2% Fibonacci extension. After Monday’s initial selling pressure following the latest geopolitical concerns, the support at 6760 held once again, triggering a price recovery. The successful closing defence of this level reinforces 6760 as a potential key support focus for the week ahead, while also ensuring that traders may need to keep focused on how sentiment responds to the on-going situation in the Middle East. If Negative Themes Emerge: If geopolitical concerns continue to build this week and further selling pressure is seen, closing breaks below 6760 may be needed to suggest scope for a phase of deeper price weakness. Such a move could suggest the market is unwinding part of the upside extremes seen during 2025. If a more extended decline unfolds and prices close below the 6760 support level, the next level to monitor could then be 6700, which marks the deeper 62% retracement. A break below this area could raise the potential of further declines toward 6508, which is the November 21st low. If Positive Themes Emerge: While the support at 6760 continues to hold on a closing basis, it keeps open the possibility of renewed upside attempts, particularly if Middle East tensions were to ease. Should buying pressure rebuild, the key resistance to monitor appears to be 7004, which is the 38.2% Fibonacci extension level. A closing break above 7004 may be needed to revive the prospect of renewed positive momentum and open the door to higher levels. As the chart above highlights, sustained closes above 7004 could see the focus shift toward 7053, which is the higher 61.8% extension level, and potentially beyond. The material provided here has not been prepared accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. 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