The US 30 (cash) index found support at the 100-day simple moving average (SMA) and the 23.6% Fibonacci retracement level of the upward wave from 18,145 to 28,187 at 26,598 on Thursday.
The technical indicators are still located in bearish area, with the MACD stretching further below its trigger line and the RSI moving below its neutral threshold of 50. Yet, the latter could also be an indication that the rally is overdone, and hence negative corrections should not be a surprise in coming sessions.
Should the price retreat below the 100-day SMA, the 200-day SMA at 26,262 could provide immediate support. Moving lower, the focus will shift to the 25,983 support and the 38.2% Fibonacci of 24,976. A violation of this level could drive the index towards the 50.0% Fibonacci of 23,661.
In the positive scenario, traders would be eagerly looking for a move above the 50-day SMA at 27,521 in order to increase buying orders. If that is the case, the rally could extend to retest the 28,388 level before heading towards the seven-month high of 28,187.
Summarizing, the pause of the latest bearish move may open the door for further improvement, however, the momentum indicators also need to stop weakening to bring that case forward.
