The US 30 cash index is retracing higher following the rebound on the 40-month trough of 18,145 on Monday. However, the price found resistance near the 38.2% Fibonacci retracement level of the down leg from the all-time high of 29,582.61 to the multi-month low of 18,145 at 22,518.
The 50- and 200-day simple moving averages (SMAs) posted a ‘death cross’ in the preceding sessions, as the strong sell off drove the market steeper lower. The RSI is pointing down after it jumped above the oversold zone, while the MACD recorded a bullish crossover with its trigger line in the negative region after the upside move over the last three days.
A closing price above the 38.2% Fibonacci of 22,518 could boost buying interest and confirm additional gains towards the 50.0% Fibonacci of 23,866 and the blue Kijun-sen line. Higher still, the 61.8% Fibonacci of 25,214 could also react as resistance ahead of the 50-day SMA currently at 26,278.
In the event of a pullback below 22,518, the bears may push harder to clear the 23.6% Fibonacci of 20,851 before tumbling to 40-month trough of 18,145.
Meanwhile in the medium-term picture, the outlook remains strongly bearish following this month’s free-fall, with traders waiting for a rally above the 200-day SMA at 27,091 to eliminate fears of a down-trending market.
