The US 30 stock index reached another all-time high of 23485.10 yesterday as the index extended its second longest bull run in its history. Prices broke above the 23000 level for the first time on October 17 and are trading above their moving averages. The bullish picture in the medium term is further supported by the MACD, which is rising and above its red signal line.
Short-term momentum indicators are also pointing to a continuation of the bullish bias. However, the RSI is well above the 70-overbought level at 85, suggesting that the latest upswing may be running out of steam and that the risk of a near-term correction is high.
Should prices reverse lower, immediate support should come at 23120, which is the 261.8% Fibonacci retracement level of the downleg from 22180.10 to 21598.10. Below that, the 161.8% Fibonacci is another major support around 22540. A drop below this area would take the index closer to the 50-day moving average (currently 22377) and significantly weaken the bullish medium-term structure. Further losses would open the way towards the 100-day moving average near the 61.8% Fibonacci level at 21960. A breach of this level would shift the outlook from positive to neutral.
To the upside, there is immediate resistance just below the 23500 area, while above that, the next major resistance to watch is just above the 24000 mark at 24060 (the 432.6% Fibonacci level).
