Featured Trade: Nasdaq 100 uptrend remains intact

Watch the 7312 key short-term support on the Nasdaq 100

Short-term technical outlook on US Tech 100 (Thurs, 19 Jul)



Key technical elements

  • In our previous report dated 12 Jul 2018 (click here for a recap), the US Tech 100 Index (proxy for the Nasdaq 100 futures) had rallied as expected to meet our resistance/target of 7400. It continued to inch higher and printed a fresh all-time high level of 7421 on Wed, 18 Jul during the Asian session.
  • Since the 18 Jul 2018 high of 7421, the Index has started to shape a slide of 0.72% to print a low of 7367 in yesterday, 18 Jul U.S. session. There are no clear signs of a bullish exhaustion with the daily RSI oscillator (a momentum indicator) that is still positive above its first corresponding support at the 50 level and hovering below its overbought region (see daily chart).
  • Elliot Wave/fractal analysis suggests that the current price action is undergoing a potential intermediate degree bullish impulsive wave 5/ that may conclude the primary degree bullish impulsive (5) of the primary uptrend in place since Feb 2016 low.
  • The next significant resistance stands at 7560 which is defined by a Fibonacci projection cluster, the upper boundary of a minor ascending channel from 05 Jul 2018 low of 7000 and the upper boundary of the primary ascending channel from Jun 2016 low (see daily & 1 hour charts).
  • The key short-term support to watch will be at 7312 which is defined by the former minor swing high area of 10 Jul 2018 and the 23.6% Fibonacci retracement of on-going up move from 28 Jul 2018 low of 6935 to 18 Jul 2018 high of 7421.
  • The hourly Stochastic oscillator still has potential room to manoeuvre to the downside before it reaches an extreme oversold level of 2. This observation suggests that the Index faces the risk of a pull-back towards the 7355 intermediate support (the former minor swing low of 13 Jul 2018 & the lower boundary of the minor ascending channel from 05 Jul 2018 low).
  • Microsoft (MSFT), a key component stock of the Nasdaq 100 with a weightage of 9.71% as at 17 Jul 2017 (the 3rd largest component stock of the Index) will report its Q4 fiscal 2018 earnings results today, 19 Jul after the close of the U.S. session where analysts polled by FactSet expect an EPS of $1.08 upped from $0.75 a year ago.  

Key Levels (1 to 3 days)

Intermediate support: 7355

Pivot (key support): 7312

Resistances: 7470 & 7560

Next support: 7143/120

Conclusion

Therefore as long as the 7312 key short-term pivotal support holds, the Index is likely to shape another potential upleg to target the resistances of 7470 and 7560.

However, failure to hold at 7312 negates the bullish tone for a deeper pull-back towards the next support at 7143/120 (the former minor swing high areas of 03/06 Jul 2018 and the 61.8% Fibonacci retracement of the up move from 28 Jun 2018 low to 18 Jul 2018 high of 7421).

Charts are from City Index Advantage TraderPro



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