Nasdaq 100 technical update: Bullish trend intact, earnings on tap
Matt Weller, CFA, CMT July 14, 2021 12:13 PM
As long as the bullish channel remains intact, the path of least resistance for the index remains to the topside
With the US “big tech” earnings season just around the corner, traders will be keying in on the gargantuan FAAMG (Facebook, Apple, Amazon, Microsoft, and Google/Alphabet) names that drive so much of the performance in the broader indices.
We’ll have individual breakdowns with the key themes and expectations for these companies in the coming weeks, but it’s worthwhile to start by analyzing the technical picture for the Nasdaq 100 (US Tech 100) index, which has nearly 40% of its holdings in the FAAMG stocks, before delving into the idiosyncrasies of the individual stocks.
Looking at the chart below, the Nasdaq 100 is undeniably in a strong uptrend, with price rising above the upward-trending 21-, 50-, and 100-day EMAs. Over the last two months, the index has surged 15% in a tight rising channel formation, so as long as that pattern remains intact, the path of least resistance for the index remains to the topside for a potential test of the $380 area (the 200% Fibonacci extension of the Q1 pullback, not shown):
Source: StoneX, TradingView
On the other hand, if we see a disappointing earnings season (or just a general loss of bullish momentum) and the 2-month bullish channel breaks, the Nasdaq 100 is likely to pull back toward previous-resistance-turned-support and the rising 100-day EMA in the $340 area.
Technicals have been the driving force for the technology-heavy Nasdaq 100 over the last couple months – now it’s time to see whether fundamentals can pick up the baton and keep the bullish momentum going!
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.