Technical Analysis – US30 stock index remains positive, ascent eases from all-time high

Anthony Charalambous, XM Investment Research Desk

US30 stock index seems to be taking a breather as it corrected lower from the all-time high of 27,773 and looks to be heading towards the 50-period simple moving average (SMA), which is located currently at the recent swing low of 27,406.

The short-term oscillators reflect weakening in the positive momentum and even possibly a shift into a sideways market. The MACD remains in the positive zone but has moved below its red trigger line. The RSI has reached its neutral mark but looks to be rising again. Moreover, the 50- and 100-period SMAs continue to back an improving picture.

To the downside, first to test the bears is the current swing low of 27,406, where the 50-period SMA also lies. Pushing below, the 27,300 key support level, which is the 23.6% Fibonacci retracement of the up wave from 25,740 to 27,773, could prove to be a more durable obstacle to overcome. Surpassing it, another tough support at 27,175, coupled with the 100-period SMA could hinder the drop to test the 38.2% Fibo at 27,000.

Alternatively, with another decisive push higher, the bulls initially face the fresh all-time high of 27,773. If it is overtaken, the index could move to test the 27,908 resistance, which is the 138.2% Fibonacci extension of the down leg from 27,312 to 25,740. If the buying interest persists, the 161.8% and 176.4% Fibo extensions could be next to draw attention.

Summarizing, the short-term bias remains bullish above 27,300 and a break above 27,773 would confirm further gains. However, a shift below 26,633 could return a neutral-to-negative picture.