Technical Analysis – US30 stock index back to neutral; swing peak restricts more gains

Anthony Charalambous, XM Investment Research Desk

US30 stock index buyers have been unable to decisively overcome the resistance of 27,069, despite the bullish signals backing the move which commenced on October 10. The 50- and 100-period simple moving averages (SMAs) have realigned themselves with the positive picture, completing a bullish crossover.

The short-term momentum oscillators confirm the positive view despite the pause in the market, also reflected by the smoothing in the Tenkan-sen’s slope. The MACD is in the positive area and underneath its red trigger line, looking to move back above it, while the RSI is looking to reclaim the 70-level. Furthermore, the bullish crossover between the Tenkan-sen and Kijun-sen lines holds in place, supporting a move higher, but some caution is warranted if the Tenkan-sen turns down.

Pushing past 27,069, the price could test the 27,193 resistance around mid-September. If buying interest persists, a formed resistance ceiling of near peaks, from 27,269 to 27,312 (September 12 to 19) could prove to be more challenging to overcome. If the bulls surpass this area too, the bulls could revisit the all-time high of 27,403.

If the sellers retake control, deflecting the price off the 27,069 resistance, the Kijun-sen line could hinder the drop to test the 26,830 support, which is the 23.6% Fibonacci retracement of the up leg from 25,279 to 27,312. Falling lower, the 200-period SMA presently at 26,765 could interrupt the decline to the more durable support of 26,656, where the 50- and 100-period SMAs reside.

Briefly, if the index were to break above 27,312, the short-term bias would turn bullish while if it remains below the 26,765, the neutral outlook will prevail.