The US 30 stock index managed to test the 38.2% Fibonacci retracement level (23,645) of the downward move from 26,960 to 21,596 today after a buoyant rally last Friday. Technical indicators are suggesting more gains in the short term, with the MACD jumping above its trigger line in negative territory and the RSI approaching its 50 neutral level, though with weaker momentum.
On the upside, traders would be eagerly looking for a break above today’s top of 23,637 to increase buying orders. If that’s the case, the rally could last until 24,110, taken from the low on October 29. If bullish forces appear even stronger, the 50.0% Fibonacci of 24,274 should be another resistance to keep in mind.
Should the price retreat, the 23.6% Fibonacci of 22,860 could provide immediate support, while lower, the focus could shift to the 22,580 restrictive area. A violation of the latter may increase speculation that the bullish correction has ended, and more selling is ahead, with losses probably extending towards the 16-month low of 21,596.
In brief, the very short-term bias looks cautiously positive, but the broader picture remains negative as long as the downtrend off 26,960 holds.
