Technical Analysis – US 30 index rebounds on 50-day SMA; bullish mode still active

Melina Deltas, XM Investment Research Desk

The US 30 index has rebounded somewhat after falling to the 50-day simple moving average (SMA) but momentum indicators now suggest that market sentiment might get worse before getting better again as the RSI is flattening near the neutral threshold of 50 and the MACD is holding below its trigger line near the zero level.

If the price manages to hold above 27,324 the index may rest around the 29,210 resistance. A decisive close above the latter could reach the all-time high at 29,582.61.

Should bearish dynamics take the upper hand, the market might revisit the 27,324 immediate support before meeting the 23.6% Fibonacci retracement level of the upward wave from 18,145 to 29,210 at 26,571. Marginally below this level, the 200-day SMA and the 100-day SMA posted a bullish cross at 26,300, which acts as strong support level. Lower, the 38.2% Fibonacci of 24,968 could stop the bearish structure.

Overall, in the medium-term picture, the bullish rally from 18,145 is still active and hence the outlook remains positive. The 50-day moving average has further increased distance above the 200-day MA, hinting that the upward pattern might hold for longer.