The US 30 index (cash) has successfully returned above the dashed long-term restrictive line, but the upper boundary of a short-term bearish channel is currently threatening to keep the index in a downward trajectory at 34,682.
A pullback, however, may not raise serious concerns if the 20-day simple moving average (SMA) and the dashed restrictive line, which both converge to 34,240, manage to place a strong footing under the price. Should the bears breach that floor, the sell-off could speed up towards the 100-day SMA currently at 33,473, while lower all eyes will focus on the channel’s bottom line, which is not far below the previous low of 33,027.
On the flip side, the momentum indicators haven’t clarified overbought conditions yet. The RSI, although flatter, is maintaining an upward trajectory, while the Stochastics keep seeking fresh highs above their 80 overbought level. Meanwhile, the MACD has jumped back to the positive territory, while the price itself is still some distance below the upper Bollinger band, all suggesting that the bulls may not easily give up the battle.
Should the index close above the channel, the spotlight will immediately shift to the record high of 35,091, which looks to be part of a bearish shooting star candlestick. A break higher would clear the way towards the 36,000 psychological mark.
In brief, the US 30 index seems to have some extra bullish fuel in store, though whether this is enough to push the price out of the bearish channel and reverse the discouraging trend signals, remains to be seen.