Technical Analysis – US 30 index regains strength above SMAs and Ichimoku cloud


Anthony Charalambous, XM Investment Research Desk

US 30 stock index (Cash) is preserving its recent positive sentiment despite a pullback from the 27,178 level. The climb in the index is aided by the upward sloping simple moving averages (SMAs). Furthermore, the intact positive charge of the Ichimoku lines and the distancing of the red Tenkan-sen above the blue Kinjun-sen line may keep upside risks alive in the very near-term.

The short-term oscillators also suggest growing bullish momentum. The MACD, comfortably above zero, has slipped below its signal line, but looks to retake it, while the RSI improves above its neutral mark. Additionally, the stochastic oscillator has turned bullish at the 20 level.

Pushing over the dipping red Tenkan-sen line, the index may face initial resistance at the nearby 27,178 high. Should a more sustained thrust higher unfold, the price may challenge the tops of 27,492 and 27,632 prior to meeting the 27,875 barrier. If buyers persist, they may head for the 28,245 border before targeting the gap from back in February.

If sellers retake control and slip under the 26,620 immediate obstacle, initial tough support may develop in the 26,270-25,993 zone, where the SMAs and low currently reside. Diving below the Ichimoku cloud, the focus may turn to the 25,410 trough, where the 23.6% Fibonacci retracement of the up leg from 18,170 to 27,632 is currently located. Steeper declines may even extend towards the 24,873 and 24,559 troughs reached throughout June.

Overall, a prevailing neutral-to-bullish bias exists in the very short-term timeframe and a break above 27,632 could repower the positive outlook. However, a shift below 24,559 may trigger worries of negative moves.