Technical Analysis – US 30 index takes a breather; upside risks remain

The US 30 stock index (Cash) is retreating somewhat from its new all-time high of 32,660, which happens to be the 138.2% Fibonacci extension of the down leg from 32,073 until 30,542 - the latter being the trough where the one week rally pushed off from. The advancing simple moving averages (SMAs) are endorsing the positive picture in the index, while the bullish crossover of 100-period SMA by the 50-period one - with a freshly steepened inclined - is further reinforcing the climb.

The short-term oscillators are suggesting a stall in the rally and a pickup in positive momentum. The MACD, a great distance above the zero level, has marginally dipped below its red trigger line, while the RSI, which is pointing upwards, is looking set to retest the overbought mark of 70, after struggling previously to overcome it. The negative slope of the %K line is waning and seems to be promoting strengthening positive sentiment.

If buying interest continues to grow, initial resistance may develop from the all-time high of 32,660. Should the bulls overcome it, next resistance could be found at the upper Bollinger band at 32,763 and the 150.0% Fibo extension of 32,842 overhead. If additional gains transpire, the subsequent resistance target for the bulls to conquer could be the 161.8% Fibo extension of 33,015.

On the flipside, should sellers reinforce the recent pullback, preliminary downside constraints could arise from the 32,343 low. Fading further, the mid Bollinger band could test the retracement at 32,223 ahead of the key support section of 32,073-32,149. Failing to dismiss selling pressure, the price may sink towards the trough of 31,742.

Summarizing, the index is sustaining a bullish demeanour above the SMAs and the trough at 31,742. A plunge below the 32,073-32,149 key support could strengthen negative tendencies.

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