Technical Analysis – US30 index takes back losses; 50-, 100-SMAs stop bullish move


Anthony Charalambous, XM Investment Research Desk

US30 stock index adopted a sideways behavior after falling from the 27,403 all-time-high to a two-month low of 25,077. It is noteworthy to point out that despite the breaches from the price, the 200-, 100- and 50-period simple moving averages (SMAs) still maintain the bearish picture.

In momentum indicators, both the RSI and the MACD are in bearish territory, suggesting that a rekindled negative move cannot be ruled out; the RSI deflected off the 50-level and heads down, whilst the MACD is below its red trigger line starting to decline again.

In the negative scenario, if the 50-period SMA holds and selling interest picks up out of the Ichimoku cloud, initial support could come from 25,675, which is the 61.8% Fibonacci retracement level of the up-leg from 24,606 to 27,403. Lower, traders could see the 76.4% Fibo of 25,266 retested before the lower swings of 25,236 and 25,077 can unfold.

To the upside, if the bulls manage to push above the 50-period SMA and the 26,000 – 26,096 area, where the 50.0% Fibo and the 100-period SMA happen to be, resistance could come next near the 38.2% Fibo of 26,335.

Overall, the short-term outlook leans towards a bearish bias, and a close below 25,236 would confirm it.