Chart of the day An impending rally of hope for Nasdaq 100

Short-term technical outlook on US Tech 100 (Wed, 27 Jun)

Key technical elements

• The on-going decline of 4.8% seen in the US Tech 100 Index (proxy for the Nasdaq 100 futures) from its current all-time high level 7333 printed on 21 Jun 2018 is now approaching a significant medium-term support level of 6854 (see daily chart).
• The 6854 key medium-term support is defined by the former swing high area of 19 Apr 2018 that has been tested and held on 23 May 2018 and close to the 50% Fibonacci retracement of the up move from 25 Apr 2018 low to 21 Jun 2018 high.
• Based on Elliot Wave/fractal analysis, the Index is likely to be undergoing an intermediate degree corrective wave 4/ decline to retrace the prior bullish impulsive intermediate degree wave 3/ structure from 25 Apr 2018 low to 21 Jun 2018 high. Thereafter, a potential final wave 5/ upleg (a rally of hope) is likely to occur to complete the wave (5) of the major degree primary uptrend in place since Jun 2016 low.
• The daily RSI oscillator is coming close to a significant corresponding support at the 40 level coupled with an impending bullish divergence signal seen in the shorter-term 4 hour Stochastic oscillator. These observations suggest that downside momentum is being “overstretched” where a potential upside reversal in price action may occur.

Key Levels (1 to 3 days)

Intermediate support: 6950 (lower boundary of the ascending channel from 04 Apr 2018 low)

Pivot (key support): 6854

Resistances: 7137, 7330 & 7400

Next support: 6600/6530

Conclusion

Therefore, as long as the 6854 key medium-term pivotal support holds and a break above 7137 is likely to see another round of potential upleg to retest 7330 before targeting the next resistance at 7400 (psychological & the upper boundary of the ascending channel in place since 04 Apr 2018).

However, failure to hold at 6854 shall see a deeper corrective decline towards the 6600/6530 long-term key support (the lower boundary of the primary ascending channel from Jun 2016 low & medium-term swing low areas of 25 Apr/03 May 2018)

Charts are from City Index Advantage TraderPro