Technical Analysis – US30 stock index consolidates; swing low support remains in place

Anthony Charalambous, XM Investment Research Desk

US30 stock index seems to be undecided as it is unable to break below the 26,833 level, which is the 23.6% Fibonacci retracement of the up leg from 25,279 to 27,312.

The short-term oscillators reflect a stall in momentum but favor a push lower. The MACD is only just below its red trigger line in the negative zone, while the RSI is in bearish territory pointing down after a deflection off the 50-level. Despite the consolidation period the negative signals of the index endure, as the price holds below the 50- and 100-period SMAs, as well as the short-term downtrend line. Moreover, the 50-period SMA has completed a bearish crossover of the 100-period one.

To the downside, if the sellers keep the upper hand and penetrate the 23.6% Fibo of 26,833, next support comes from the swing low of 26,705 which was tested multiple times. If the bears overrun this level as well, the drop could test a more durable support at 26,534, which is the 38.2% Fibo and where the 200-period SMA also lies. Overcoming the 200-period SMA could lead to the 50.0% Fibo of 26,300 and nearby support of 26,243.

In the positive scenario, if buyers regain control, a more challenging barrier comes around 27,000 level, where the 50-, 100-period SMAs and downtrend line reside. After conquering this, bulls could test the 27,192 resistance. Another decisive attempt could turn traders’ eyes to the recent peak of 27,312 before considering the all-time-high of 27,403.

Summarizing, the short-term outlook is neutral-to-bearish. However, a break below 26,705 or above 27,192 would reveal the new directional bias.