Chart of the day - Nasdaq 100 sold off but uptrend remains intact
Kelvin Wong March 14, 2018 10:17 AM
Despite yesterday sell-off, the medium-term uptrend of US Tech 100 Index (proxy for the Nasdaq 100 futures) remains intact as it continues to evolve within a medium-term ascending channel in place since 09 Feb 2018 low.
Short-term technical outlook on US Tech 100 Index (Wed, 14 Mar)
Key technical elements
- The US Tech 100 Index (proxy for the Nasdaq 100 futures) is the sole benchmark U.S. stock index to print another new all-time high of 7186 in yesterday, 13 Mar early U.S. session. Thereafter, it declined by 2.2% to print a marginal low of 7023 at the end of the U.S. session reinforced by the media report that stated that the U.S. administration could announce steep tariffs and investment restrictions on China as soon as next week where the narrative of a looming trade war spooked the market again. Given its high beta and momentum driven factors that characterise the US Tech 100 Index, it was the worst performing U.S. benchmark stock index as it borne the brunt of yesterday’s sell-off.
- Despite yesterday sell-off, its medium-term uptrend remains intact as it continues to evolve within a medium-term ascending channel in place since 09 Feb 2018 low. In addition, the daily RSI oscillator has managed to stall and turned up from its 1st corresponding support at the 60% level without any prior bearish divergence signal (see daily chart).
- The key short-term support rests at 6996 which a confluence of elements. The former swing high of 26 Feb 2018, the minor ascending trendline from 02 Mar 2018 low and the 50% Fibonacci retracement of the recent up move from 07 Mar 2018 low to yesterday’s high of 7186.
- Based on the Elliot Wave Principal and fractal analysis, yesterday’s decline can be characterised as a potential minor degree corrective wave 4 pull-back/consolidation within a short-term bullish impulsive wave structure in place since 02 Mar 2018 low. In addition, yesterday’s decline has stalled at 38.2%/50% Fibonacci retracement zone of the up move up move from 07 Mar 2018 low to yesterday’s high of 7186, a potential end-target of the aforementioned wave 4 pull-back. These observations suggest that the Index has reached a significant short-term inflection zone where a new impulsive upleg may materialise at this juncture.
- The next significant short-term resistance stands at 7350 which is defined by the 0.618 Fibonacci projection of the up move from 02 Mar 2018 low to yesterday high of 7186 projected from today (14 Mar) Asian session low of 7016.
Key Levels (1 to 3 days)
Intermediate support: 7050
Pivot (key support): 6996
Resistances: 7186, 7350 & 7430/80
Next supports: 6926 & 6690
Therefore as long as the 6996 key short-term pivotal support holds, the Index is likely to undergo another round of potential impulsive upleg to retest the current all-time high of 7186 before targeting the next resistance at 7350.
On the flipside, a break below 6996 should negate the bulls for a deeper pull-back to test the 6926 medium-term ascending channel support from 09 Feb 2018 low. Only a daily close below 6926 will put the medium-term uptrend at risk for a further decline to retest the 6690 swing low areas of 22 Feb and 02 Mar 2018.
Charts are from City Index Advantage TraderPro
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