Technical Analysis – US 30 index stalls positive push above 200-SMA

Anthony Charalambous, XM Investment Research Desk

US 30 stock index (Cash) recently thrusted above the 26,880 level, that being the 76.4% Fibonacci retracement of the down leg from 29,582 to 18,170, after finding some traction from the 200-day SMA at 26,295. The index’s positive momentum has slowed slightly as reflected in the short-term oscillators.

The MACD, holding relatively steady in the positive region, has barely moved above its red trigger line, while the RSI has reversed ahead of the 70 mark. Furthermore, the Stochastics are located in overbought territory and the %K looks to complete a bearish crossover, suggesting further weakening. Nevertheless, some caution is warranted until the bearish mode is cemented by the oscillators.

If buyers retake control, immediate resistance may develop around the 27,632 significant peak. Should buying interest intensify, the index may challenge the inside swing low of January 8 ahead of the 28,900 boundary. Further gains may then revisit the all-time high of 29,582.61 before considering new uncharted waters.

Otherwise, if sellers steer back below 76.4% Fibo of 26,880, a toughened support zone from the bullish cross at 26,295 until the cloud’s upper surface, encompassing the 26,000 low, could prove a difficult obstacle to dive under. If this region fails to halt downside moves, the 61.8% Fibo of 25,216, at the floor of the cloud, may prevent further losses towards the 100-day SMA located at the 24,900 trough. Extending the correction could then turn the spotlight towards the 24,144 support and 50.0% Fibo of 23,869 beneath before sinking to the 22,788 trough.

Overall, the short-to-medium-term timeframe retains an improving tone and the bullish cross that’s taking form could boost this outlook. A shift below 24,900 could reinforce negative sentiment.