Technical Analysis – US 30 index fails to improve the bullish picture

Melina Deltas, XM Investment Research Desk

The US 30 index is creating a sideways channel with an upper boundary the 24,913 resistance and lower boundary the 22,900 support. The index is still developing above the 50-day simple moving average (SMA), however, the MACD oscillator is flattening in the positive region and the RSI is approaching the neutral region, endorsing the neutral mode in the short-term.

Should the index make another run lower, it’s likely to meet support at the 50.0% Fibonacci retracement level of the downward wave from all time high at 29,582.61 to the 40-month trough of 18,145. A successful break below this key support area would open the way for 23,322 and the 22,900 area, which coincides with the 50-day SMA. A break below this crucial line could open the way for the 38.2% Fibonacci of 22,518.

On the other side, an increase above the upper surface of the range of 24,913, could see the price move towards the 61.8% Fibonacci of 25,214 ahead of the 100-day SMA at 25,482. Above that, the 200-day SMA currently at 26,371 could attract traders’ attention before flirting with the 27,091 – 27,324 resistance area.

In the bigger picture, the US 30 index would need to make a sustained climb above the 100-day SMA in order for the outlook to become convincingly bullish.