Commodities

Technical Analysis – US 30 index pauses negative move at 100-day SMA

Posted on September 25, 2020 at 9:31 am GMT

Melina Deltas, XM Investment Research Desk

The US 30 (cash) index found support at the 100-day simple moving average (SMA) and the 23.6% Fibonacci retracement level of the upward wave from 18,145 to 28,187 at 26,598 on Thursday.

The technical indicators are still located in bearish area, with the MACD stretching further below its trigger line and the RSI moving below its neutral threshold of 50. Yet, the latter could also be an indication that the rally is overdone, and hence negative corrections should not be a surprise in coming sessions.

Should the price retreat below the 100-day SMA, the 200-day SMA at 26,262 could provide immediate support. Moving lower, the focus will shift to the 25,983 support and the 38.2% Fibonacci of 24,976. A violation of this level could drive the index towards the 50.0% Fibonacci of 23,661.

In the positive scenario, traders would be eagerly looking for a move above the 50-day SMA at 27,521 in order to increase buying orders. If that is the case, the rally could extend to retest the 28,388 level before heading towards the seven-month high of 28,187.

Summarizing, the pause of the latest bearish move may open the door for further improvement, however, the momentum indicators also need to stop weakening to bring that case forward.

US 30 index

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.