chart of the day nasdaq 100 short term bullish reversal elements sighted 1855752017

Short-term technical outlook on Nasdaq 100 (Fri, 07 July 2017)

(Click to enlarge charts)

What happened earlier/yesterday

The US Tech 100 Index (proxy for the Nasdaq 100 futures) had been the worst performer among the main U.S benchmark stock indices that comprise of the S&P 500, Dow Jones Industrial Average and Russell 2000 as growth related technology stocks such as the “FAANGs” – (Facebook, Apple, Amazon, Netflix & Google/Alphabet) took a beating since 09 June 2017.

The Dow Jones Industrial Average had managed to print a recent fresh new all-time high on 21562 on 03 July 2017 and in contrast, the Nasdaq 100 continued to be capped below resistances.

Interestingly on an intraday basis as seen its short-term hourly chart, the US Tech 100 Index had started to display a marginal “higher low” where such price movement was not displayed on the S&P 500 and the Dow Jones Industrial Average. A positive sign for the overall U.S. stock market as the “high valuation” technology stocks are the main culprit for the recent wobbly price action seen on the S&P 500.

Key elements

• The recent 5.7% from its current all-time high of 5898 printed on 09 June 2017 is now resting at its pull-back support of a long-term ascending channel bullish breakout from its former upper boundary now turns pull-back support at 5550 which also confluences with the 23.6% Fibonacci retracement of the medium-term uptrend in place since 09 November 2016 low to 09 June 2017 high (see daily chart).
• The recent decline seen in the daily RSI oscillator has managed to stall at its corresponding support at the 37% level. The RSI support level of 37% has managed to trigger prior significant bullish reversal in price action of the Index in the past (depicted by the shaded blue boxes in the daily chart).
• On the shorter-term, the Index has traced out a bullish “Descending Wedge” configuration since its minor swing high of 26 June 2017 and the upper boundary/resistance of the “Descending Wedge” now stands at 5628.  A formation of such price action configuration tends to indicate the end of a downtrend.
• In addition, the hourly RSI oscillator has also traced out a bullish divergence signal which suggests that the recent downside momentum of price action has started to ease.

Key Levels (1 to 3 days)

Intermediate support: 5584

Pivot (key support): 5550

Resistances: 5628, 5680 & 5770

Next support: 5450 (gap)

Conclusion

Therefore, the recent down move of the Index has started to show exhaustion signs and it is now at an inflection point for a potential bullish reversal at least in the short-term. As long as the 5550 key short-term pivotal support holds and a break above 5628 is likely to open up scope for a potential rally to target the next resistances at 5680 follow by 5770 next (minor congestion zone from 14 June to 29 June 2017 & the descending trendline from 09 June 2017 high).

On the other hand, a break below 5550 is likely to put the preferred bullish tone on hold to see a deeper decline towards the next support at 5450 (the gapped up seen after the outcome of the first round of the recent French presidential election).

Charts are from City Index Advantage TraderPro

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