Tuesday, 11 April 2017 17:55 Written by

Technical Analysis – US 30 stock index still consolidating, moves into cloud

Posted on April 11, 2017 at 10:59 am GMT by the XM Investment Research Desk


The US 30 stock index has been consolidating since hitting an all-time peak of 21170.40 on March 1. Prices have consequently entered the Ichimoku cloud and this underlines the neutral bias in the near term. RSI is also painting a neutral picture as it has been hovering around the 50 level since late March.

The longer-term outlook remains bullish given the positively aligned and upward trending 50- and 200-day moving averages (MA). However, the recent consolidation has weakened the positive outlook, especially as prices have now approached the 50-day MA.

To reinforce the bullish outlook, the index would need to break above the cloud and challenge March’s record high of 21170.40. But first, prices would likely meet resistance at the top of the cloud at the 20700 level, which is also where the tenkan-sen line has currently flat-lined. Further up, the previous resistance area of 20975 is another barrier to watch.

To the downside, the 50-day MA has been acting as support over the past week and stands ready to serve as immediate support in the 20642 area for any intra-day down moves. Further losses would take the index to the bottom of the Ichimoku cloud at 20420. This level is not too far from the 6-week low of 20408.50 hit on March 27. A breach of this area would therefore mark a shift to a bearish bias in the near-term.

Read 137 times Last modified on Tuesday, 11 April 2017 17:55

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