Featured Trade: Nasdaq 100 squeezed up to retest key resistance

Nasdaq 100 at key inflection zone for a minor mean reversion decline.

Short-term technical outlook on Nasdaq 100/ US Tech 100 Index (Wed 03 Apr)



click to enlarge charts

Key technical elements

  • In today Asian session, the US Tech 100 Index (proxy for the Nasdaq 100 futures) has staged a rally of 0.85% to print a current intraday high of 7551 in the European session. The rally has been reinforced by a Financial Times news report that U.S and China are getting closer to a final trade agreement and an upbeat China Caixin services PMI data for Mar that jumped to 54.4, the fastest rate of increase in 14 months.
  • The Index is now hovering below a key pivotal resistance of 7560 which is defined by the former primary ascending channel support from Jun 2016 low and a Fibonacci expansion cluster.
  • The daily RSI oscillator is now coming close to its overbought region coupled with a bearish divergence signal seen in the shorter-term hourly Stochastic oscillator at its overbought region. These observations suggest an overstretched rally where the Index faces the risk of a minor mean reversion decline at this juncture.
  • The significant near-term supports rest at 7418 and 7385 (the former minor swing high area of 26 Mar 2019, the gapped up seen on Mon, 01 Apr Asian session & the minor ascending trendline from 08 Mar 2019 low).

Key Levels (1 to 3 days)

Pivot (key resistance): 7560

Supports: 7418 & 7385

Next resistances: 77630 & 7700 (all-time high)

Conclusion

If the 7560 key pivotal resistance is not surpassed, the Index may see a minor mean reversion decline to target the near-term supports at 7418 and 7385.

However, a break above 7560 invalidates mean reversion scenario for a further push up towards 77630 (1.00 Fibonacci expansion of the recent up move from 27 Mar 2019 low to 01 Apr 2019 minor high projected from 01 Apr 2019 U.S. session low) and even the current all-time high level of 7700.

Charts are from City Index Advantage TraderPro




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