Technical Analysis – US 30 index resumes bullish bias; upside risks improve

The US30 stock index (Cash) has currently crept over the all-time high of 33,253 and is headed for the 33,638 level, which happens to be the 261.8% Fibonacci extension of the down leg from 28,900 to 26,065. The sturdy advancing simple moving averages (SMA) are defending the bullish structure, while positive sentiment appears to be picking up.

The Ichimoku lines are conveying the above mentioned view point - as are the short-term oscillators - and are starting to turn upwards after a flattened state. The MACD, in the positive region, is holding above its horizontal red trigger line, while the RSI is rising towards the 70 level. The stochastic oscillator resides in overbought territory and it appears that the %K line is starting to recover.

To the upside, resistance could originate from the 261.8% Fibo extension of 33,638. If buying interest persists, and the price overcomes this barrier, the 34,000 handle and the 34,500 boundary respectively could then provide the next constraints impeding further appreciation.

If sellers retake control and steer the price down, downside friction could arise from the red Tenkan-sen line at 32,740 ahead of the critical support section of 31,669-32,149, reinforced by the blue Kijun-sen line and the 50-day SMA. A more profound retraction in the index could then challenge the Ichimoku cloud and the 100-day SMA around 31,056 before the trough at 30,542 steps into the picture.

Summarizing, the index is sustaining a bullish bias above the 31,669-32,149 support base, the SMAs and the cloud. A break below 30,542 could highlight negative price tendencies.

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