Bearish Sentiment Dominates US Stocks as US30 Index Below Key Resistance Levels

• Corrective Phase: The index has entered a corrective phase after hitting record highs of 40,000, indicated by a daily reversal pattern coinciding with the break below the crucial 45 daily exponential moving average channel (EMA). With bearish sentiment having accelerated at the start of the week, the RSI indicator on the daily chart is approaching the 30 level which would signal to momentum entering oversold conditions.

• Weekly Timeframe Context: Weekly chart correction has been overdue for a corrective wave, with bullish momentum having dominated since October 2023, when expectations started to shift regarding a peak in the interest rate cycle. With the weekly timeframe having been signalling overbought conditions since December, the recent correction has allowed RSI indicators to return to neutral territory.

• Key Support Levels: Next significant medium-term support area is outlined at the 200 daily EMA channel, positioned around 37,000, suggesting the potential for a further 3% correction.

• 4-Hour Timeframe Resistance: Immediate resistance is outlined at the round number of 38,000 which was breached on Monday. While the key to the downtrend structure on the 4 Hour timeframe remains to be at 38,400, where we find the previous confirmed top coinciding with the downward trendline resistance and key moving averages. As long as price remains below this key resistance area, the short-term bearish sentiment is maintained.

• Market Outlook: Bearish traders continue to monitor for any retracement to the key resistance area of interest to initiate any further selloffs. Bullish traders are on the lookout for any signs of support to gauge potential recovery scenarios, with the key 37,000 support level in focus.

US30 4 Hour Chart

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