Featured Trade: Nasdaq 100 reversed from range resistance

Potential bearish reversal for Nasdaq 100

Short-term technical outlook on US Tech 100 (Thurs, 27 Sep)


Key technical elements

  • Since it hit a fresh record high of 7691, the US Tech 100 Index (proxy for the Nasdaq 100 futures) have continued to show bullish exhaustion signals. From a medium-term perspective, it has traced out an impending bearish reversal “Head & Shoulder” configuration with its neckline support at 7400 (refer to daily chart).
  • In yesterday, 26 Sep post FOMC price action has ended the U.S session with a daily bearish “Gravestone Doji” candlestick formed at the “right shoulder” of the aforementioned “Head & Shoulders” configuration.
  • The hourly Stochastic oscillator is now approaching its oversold region where the Index may stage a bounce to test its intermediate resistance at 7595.
  • The key short-term resistance stands at 7620 which is defined by the upper limit of a minor “symmetrical triangle” range configuration in place since 07 Sep 2018 low of 7389 and Fibonacci retracement/projection cluster (refer to 1 hour chart)
  • The near-term support to watch will be at 7480 which is defined by the minor swing low areas of 20/24 Sep 2018 (refer to 1 hour chart).

Key Levels (1 to 3 days)

Intermediate resistance: 7595

Pivot (key resistance): 7620

Supports: 7525, 7480 & 7400

Next resistance: 7691/7700

Conclusion

The US Tech 100 Index has shown bearish elements at its range resistance which highlights the risk of another drop towards its range support in the short-term. Therefore, as long as the 7620 key short-term pivotal support holds, the Index may see a decline towards 7525 and 7480 (minor “symmetrical triangle” range support).  A break below 7480 is likely to see a further potential decline to test the key 7400 neckline support of the bearish “Head & Shoulders” reversal configuration.

On the flipside, a clearance above 7620 put the bears on hold for a squeeze up to retest its all-time high level of 7691/7700.

Charts are from City Index Advantage TraderPro





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