Chart of the day - Nasdaq 100 back at medium term range support

Nasdaq 100 may shape a mean reversion rebound above the triangle range support of 6400.

Short-term technical outlook on US Tech 100 Index (Wed, 28 Mar)

Key technical elements

  • In yesterday  27 Mar U.S. session , the US Tech 100 Index (proxy for the Nasdaq 100 futures) had erased all its prior gains recorded on Mon, 26 Mar tumbled by close to 4% to print a low of 6476. The Nasdaq 100 was the worst performer yesterday among the major U.S. benchmark stock indices (S&P 500, Dow Jones Industrial & Russell 2000 shed an average of -1.7%).  The sharp downside reversal has been attributed to the looming trade war factor between U.S. & China where the media has reported that the Trump administration is considering the use of an emergency law to restrict China led investments in U.S. technology sectors (where major technology & semiconductor stocks such as Apple; Micron Technology bear the brunt of yesterday’s carnage).
  • The Index is now “resting” right at the lower boundary of a medium-term “triangle” range configuration in shape since 09 Feb 2018 low now acting as a support at 6476/6400.
  • The aforementioned “triangle range” support of 6476/6400 also confluences with a Fibonacci cluster (76.4% retracement of the previous up move from 09 Feb low to its current all-time high of 7186 printed on 13 Mar 2018 & the 0.764 projection of the down move from 29 Jan high to 09 Feb 2018 low projected from 13 Mar 2018 high). Thus based on Elliot Wave/fractal analysis, yesterday’s decline may have seen the completion of a minor degree corrective down move wave (c) of the impending medium-term “Triangle” range configuration where a potential corrective up move wave (d) can materialised at this juncture towards the “triangle” range resistance (see 4 hour chart).
  • In conjunction, the shorter-term 4 hour Stochastic oscillator is now coming close to an extreme oversold level of 3% last seen on 06 Feb 2018 with an impending bullish divergence signal. These observations suggest that yesterday’s downside momentum of the price decline has been “overstretched” where a potential mean reversion rebound can materialise.

Key Levels (1 to 3 days)

Pivot (key support): 6476/400

Resistances: 6830 & 7020

Next support: 6255/6160 (major pivot)


Therefore as long as the 6476/400 short-term pivotal support holds, the Index may shape a mean reversion rebound to retest Mon, 26 Mar swing high area of 6860 and above opens up scope for a further potential push up to target the next intermediate resistance at 7020 (former minor swing low area of 14/16 Mar 2018 & 76.4% of the recent decline from 13 Mar high to yesterday, 27 Mar 2018 low).

However, a break below 6400 is likely to see a further slide to retest the 6255/6160 major pivotal support (09 Feb 2018 swing low, the median line of the primary ascending channel from 11 Feb 2016 low & close to the 23.6% Fibonacci retracement of the on-going primary up trend from Feb 2016 low to 13 Mar 2018 high).

Charts are from City Index Advantage TraderPro 

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