Technical Analysis – US 30 index retracts from all-time-peak as momentum fades

Anthony Charalambous, XM Investment Research Desk

US 30 stock index’s appreciation appears to have paused after it withdrew from the recently logged all-time-high of 28,336. Although positive momentum seems to have weakened, the bigger positive picture continues to be assisted by the upward slopes in the simple moving averages (SMAs) and the bullish crossover of the 100-period SMA by the 50-period one.

The short-term oscillators reflect a stall in the market yet lean towards a positive outlook. The MACD deep in the positive region, has slipped below its red trigger line, while the RSI, currently in bullish territory, is marginally improving. The ADX confirms that a strong positive trend is still in place.

If the climb higher is revived, the initial barrier against further advances is the fresh peak of 28,336. Overtaking it, the 28,410 resistance – which is the 123.6% Fibonacci extension of the down leg from 28,202 to 27,324 – could test the new move up. Continuing higher, the 138.2% Fibo extension of 28,535 could apply some downside pressure before the focus turns to the 161.8% Fibo extension of 28,745.

If sellers manage to steer the index lower, initial support could come from the 28,025 low ahead of the 50- and 100-period SMAs around 27,975. Diving below, the 200-period SMA currently at 27,818 could challenge the bears before the supportive trendline and swing low of 27,715 come into range. If sellers persist, the 27,560 support could interrupt the test of the one-month trough of 27,324.

In brief, the short-term bias is bullish above 27,560 while a shift below 27,324 would strengthen the negative sentiment.