Technical Analysis – US30 index turns sideways after making new highs

Anthony Charalambous, XM Investment Research Desk

US30 stock index has pushed higher, making higher highs, after breaching the 26,708 high from May 1. The two-month run up from the low of 24,606 produced the 27,403 all-time-high, but the price has currently paused and moved into a short-term sideways market.

The MACD is below its red trigger line in the positive region, whilst the RSI hovers midway between the neutral and over bought levels. The ADX is currently showing weakness and the absence of a trend in place.

Momentum indicators are suggesting if buying interest were to pick up, a jump north could see the 27,500 round number come into play before the 28,000 hurdle which is the 161.8% Fibo of the pullback from 26,708 to 24,606.

For a downside scenario, the index would find initial support at the 20-day simple moving average (SMA) trading now around 27,140, before the supports of 27,000 and 26,950 could be tested. Continued losses could pause at the next barrier of 26,750 – 26,660, and if the swing low is fractured, the 50- and 100-day SMAs could then test the potency of the decline.

In the short-term picture, the index is currently neutral, but a break of the all-time high of 27,403 could reignite the bullish bias, while a bearish outlook would resume under the four-month low of 24,606.