- US 30 index in the red after recording a new 22-month high
- Aggressive move higher from the October lows
- Some early signs of rally exhaustion from the momentum indicators
The US 30 cash index is trying to record its second consecutive red candle after registering a new 22-month high, 12% higher from the late October lows. It is currently battling with the October 13, 2022 upward sloping trendline with the bulls possibly taking a breather and preparing for the next eventful trading period ahead of the seasonal break.
In the meantime, the momentum indicators are possibly preparing to send some rally exhaustion signals. The RSI has probably peaked, and it is now trading sideways. Similarly, the stochastic oscillator continues to scratch the upper end of its overbought territory, potentially revealing a lack of fresh buying momentum. On the other hand, the ADX has reached a new higher high, confirming the very strong bullish trend in the US 30 index.
Should the bulls remain hungry, they could try to overcome the resistance set by the October 13, 2022 upward sloping trendline. This might not prove an easy task, but, if successful, the bulls could then have the chance to push the US 30 index towards the January 5, 2022 high at 36,951.
On the flip side, the bears are desperately trying to make a stand and could choose to defend the October 13, 2022 trendline. They could then stage a move lower towards the busy 35,496-35,686 range, which is defined by the July 27, 2023 and the April, 2022 highs. Even lower, the 34,930-35,091 area, populated by the December 13, 2022 and May 2021 highs, has proved in the recent past to be a strong support area.
To sum up, US 30 cash index bulls are probably taking a breather ahead of some key market events. The bears could try to take advantage of the situation, but they need help from the momentum indicators to stage decent correction.
