The Nasdaq 100 was bouncing back as it tested support at 28,000 but pressure remained amid concerns about the AI trade. Short-term oscillators are quite oversold after a four or five-day drop, so a recovery around current levels is not entirely surprising. Even so, the risk to the near-term Nasdaq 100 forecast is tilted to the downside until the series of lower lows and lower highs breaks.
- The Nasdaq 100 is testing support at 28,000 as concerns about the AI trade weigh on the index
- Short-term oscillators are oversold, so a recovery would not be surprising
- The risk to the near-term forecast is tilted to the downside until the series of lower lows and lower highs breaks
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Fed tightening narrative stays intact after recent tech sells off
The recent technology sell-off has come as the Federal Reserve is preparing to tighten policy again. Third-quarter growth was a strong 3.4% annualised and inflation remains above target, so this week's ISM surveys and October jobs report will be watched closely.
The labour market is expected to show a modest improvement after September's weak reading, but unless Friday's report is particularly poor, it is unlikely to materially change the Fed tightening narrative. Inflation and price pressures remain more important.
Technical Nasdaq 100 forecast and key levels to watch
From a technical analysis point of view, key resistance comes in between 28,745 to around 29,000. This shaded region was support until Friday's breakdown, and Monday's retest produced a rejection from it as well. A move back above the region is needed to turn the technical bias back to bullish. If that does not happen, the weakness could persist for a while yet, resulting in a deeper correction.
Frequently Asked Questions
Why does 28,000 matter for the Nasdaq 100?
The 200-day moving average converges at that level with the base of the prior rally from the end of July. That makes it a key area of support for the index.
What are the Nasdaq 100's downside levels if the sell-off continues?
If the selling pressure resumes, the next downside target is the July low at 27,058. Below that there is not much in the way of obvious levels until the double top high between 26,100 to around 26,200, which was previously resistance and could turn into support, followed by the 25,000 psychologically important level.
-- Written by Fawad Razaqzada, Market Analyst | Follow Fawad on Twitter @Trader_F_R
