US 30 index may remain under pressure

The US 30 index (cash) plummeted to 31,979 on Thursday, exiting the five-month-old range to mark a new lower low.

The aggressive decline squeezed the price below the 200-day simple moving average (SMA), which acted as a firm support twice since the start of November, increasing the risk for more downside.

The negative slope in the momentum indicators is endorsing the bearish case, shifting attention to the 38.2% Fibonacci retracement of the 36,950-25,583 downleg at 31,772. Slightly lower, sellers could test the broken resistance trendline from the January 2022 top before heading for the 31,200-31,000 constraining zone.

In other discouraging signals, the 20-day SMA has slipped below the longer-term SMAs, indicating a deteriorating market.

Alternatively, the bulls may try to pierce through the 32,480-32,755 area and jump back into the range with scope to test the shorter-term SMAs within the 33,200-33,480 territory. If they successfully claim the latter, the spotlight will turn to the 61.8% Fibonacci of 34,275. Another victory here would boost hopes for an uptrend resumption.

In brief, the US 30 index could remain under pressure in the short term. The next support could emerge around 31,772.

About the author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics. Previously, she earned a bachelor of science in Economics from the University of Cyprus. Apart from foreign exchange markets, her research interests include the impact of International trade on labour markets and product development.