US30: Short setup brewing

Sitting in a rising wedge with bearish divergence after running into resistance at 43100, the US30 contract finds itself at an interesting juncture on the charts. If it can’t stage a definitive break above these levels, a short setup could be on the cards.

If the contract cannot break and hold above 43100, traders could look to initiate short positions targeting the 200-day moving average initially. If that were to give way, the target could be lengthened to 42000, where wedge support is currently found. A stop above 43100 would protect against reversal.

While MACD has staged a bullish crossover, the momentum signal is countered by what’s still bearish divergence between RSI (14) and price despite the latest bounce.

Given the proximity to month end—a period notorious for window dressing and false signals—the preference would be to wait for another retest and failure at 43100 before initiating the trade.

A de-escalation in trade tensions, lower crude prices and the prospect of a Fed rate cut as soon as July have been tailwinds for the contract over recent days. If it can’t continue to rally in this environment, it questions just what would be required to deliver further upside, just as negative tariff headlines potentially loom.

Good luck!
DS