Technical Analysis – US 30 index sidelined in near term; strongly negative in medium term

Melina Deltas, XM Investment Research Desk

The US 30 cash index is being embraced by the 23.6% Fibonacci retracement level of the down leg from 29,582.61 to 18,145 at 20,851 and the 38.2% Fibonacci at 22,518 over the last days.

The lack of direction is confirmed by the RSI indicator which is moving with weak momentum beneath the 50 level, while the MACD is edging sideways above the trigger line. Moreover, the 50- and 200-day simple moving averages (SMAs) are continuing to turn lower after the ‘death cross’ in the previous sessions.

If there is a successful break above the 38.2% Fibonacci of 22,518, it could boost the bullish sentiment and support additional gains towards the 50.0% Fibonacci of 23,866. Even higher, the 61.8% Fibonacci of 25,214 could also react as resistance ahead of the 50-day SMA currently at 25,481.

In the event of a pullback below the 23.6% Fibo, the bears could drive the market towards the 40-month trough of 18,145 before diving to the 17,160-17,490 support area, taken from the lows on November and June of 2016.

To conclude, in the medium-term picture, the outlook remains strongly bearish following this month’s free-fall, while in the very short-term, the bias is neutral.