Technical Analysis – US 30 cash index almost ripe for a decent pullback
May 4, 2023 8:26 am
The US 30 cash index has once again failed to convincingly break above the 34,280 level prompting a small pullback. This is the sixth time that the bulls have not achieved an upwards breakout in the past 10 months, thus raising questions of their true ability to dictate market movements.
The index is edging higher today, but the momentum indicators seem to favour the bears at this juncture. The Average Directional Movement Index (ADX) confirms that the short-term bullish trend from the mid-March lows has ended, and the RSI has dipped again below its 50-threshold. More interestingly, the stochastic oscillator is moving lower in an almost vertical fashion revealing a decent bearish tendency.
Should the bears take advantage of the favourable environment and break the 100-day simple moving average (SMA), they would come up against the busy 33,028-33,097 area set by the June 21, 2021 low and the 50-day SMA. Even lower, the key 32,755-767 range, defined by the 50% Fibonacci retracement of the January 5, 2022 – October 3, 2022 downtrend and 200-day SMA respectively, is bound to prove tougher to crack.
On the other hand, the bulls crave for another retest of the August 16, 2022 high at 34,280, but they firstly have to break the 33,518-754 area populated by the 61.8% Fibonacci retracement and the October 1, 2021 low. Even higher, the twin December 13, 2022 and May 10, 2021 highs at 34,930 and 35,091 respectively would clearly test their resolve.
To sum up, the repeated failures at the 34,280 level have opened the door to US 30 bears for a sizeable pullback, especially as the overall technical picture appears to favour them.
The US 30 cash index has once again failed to convincingly break above the 34,280 level prompting a small pullback. This is the sixth time that the bulls have not achieved an upwards breakout in the past 10 months, thus raising questions of their true ability to dictate market movements.
The index is edging higher today, but the momentum indicators seem to favour the bears at this juncture. The Average Directional Movement Index (ADX) confirms that the short-term bullish trend from the mid-March lows has ended, and the RSI has dipped again below its 50-threshold. More interestingly, the stochastic oscillator is moving lower in an almost vertical fashion revealing a decent bearish tendency.
Should the bears take advantage of the favourable environment and break the 100-day simple moving average (SMA), they would come up against the busy 33,028-33,097 area set by the June 21, 2021 low and the 50-day SMA. Even lower, the key 32,755-767 range, defined by the 50% Fibonacci retracement of the January 5, 2022 – October 3, 2022 downtrend and 200-day SMA respectively, is bound to prove tougher to crack.
On the other hand, the bulls crave for another retest of the August 16, 2022 high at 34,280, but they firstly have to break the 33,518-754 area populated by the 61.8% Fibonacci retracement and the October 1, 2021 low. Even higher, the twin December 13, 2022 and May 10, 2021 highs at 34,930 and 35,091 respectively would clearly test their resolve.
To sum up, the repeated failures at the 34,280 level have opened the door to US 30 bears for a sizeable pullback, especially as the overall technical picture appears to favour them.
Related Posts: