Featured Trade: Potential impulsive downleg resumes for Nasdaq 100

Nasdaq 100 is likely to resume its impulsive downleg.

Short-term technical outlook on US Tech 100 (Fri, 19 Oct)



Key technical elements

  • The recent corrective rebound of the US Tech 100 Index (proxy for the Nasdaq 100 futures) from its 6905swing low area of 11 Oct 2018 (also coincides with the primary ascending channel support from Jun 2016 low had reached its key medium-term pivotal resistance zone of 7350/7400.
  • The aforementioned 7350/7400 key medium-term resistance is defined by the neck resistance of the “Double Top” that has been broken down on 08 Oct 2018 and a Fibonacci retracement/projection cluster.
  • Yesterday’s (18 Oct) price action of the Index has staged a bearish breakdown from a minor “bearish flag” configuration in place since 11 Oct 2018 low. Momentum remains bearish as the daily RSI oscillator remains below a significant corresponding resistance at the 50 level coupled with the shorter-term 1-hour Stochastic oscillator that is hovering right below an extreme overbought level.
  • The key short-term resistance to watch will be at 7226 which is defined by the former minor swing low area of 17 Oct 2018 and the minor descending trendline from 17 Oct 2018 high that has capped the recent rebound seen yesterday, 18 Oct.

Key Levels (1 to 3 days)

Pivot (key resistance): 7226

Supports: 7050 & 6905

Next resistance: 7350/400 (key medium-term pivot)

Conclusion

The recent rebound from the 11 Oct 2018 swing low of 6905 has reached a key medium-term pivotal resistance of 7350/400 coupled with the bearish elements (as per highlighted above) that occurred yesterday, 18 Oct, the Index is likely to have started another round of impulsive downleg.

As long as the 7226 short-term pivotal resistance is not surpassed, the Index is at risk of shaping a further push down to retest its near-term supports of 7050 and 6905 in the first step.

On the other hand, a break above 7226 negates the bearish tone for a squeeze up to retest the 7350/7400 key medium-term pivotal resistance.

Charts are from City Index Advantage TraderPro



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