Chart of the day Nasdaq 100 at risk of shaping multi week corrective decline

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By :  ,  Financial Analyst

Short-term technical outlook on US Tech 100 Index (Tues, 05 Dec)

Key technical elements

  • The multi-month (close to a year) uptrend of the US Tech 100 Index (proxy for the Nasdaq 100 futures) from 0 Nov 2016 low is now showing signs of bullish exhaustion.
  • The recent price action of the Index has poked above the upper boundary of a long-term primary ascending channel in place since Feb 2016 with a bearish divergence signal seen in the daily RSI oscillator. Yesterday (04 Dec, U.S. session) push down in price action has led the Index to retest 6240 (the reintegration level of the former upper boundary of the aforementioned ascending channel). These observations suggest that medium-term upside momentum of price action has started to abate (see daily chart).
  • Based on the Elliot Wave/fractal analysis, the Index is likely to have completed an intermediate degree bullish impulsive wave 3/ with its potential end target at 6425 that is derived from a Fibonacci projection cluster. Therefore, it may start to undergo a multi-week corrective decline at this juncture, wave 4/.
  • In the shorter-term, the price action of the Index has started to involve in a minor descending channel (depicted in pink).  The next significant short-term support after 6240 rests at 6208 which is defined by the lower boundary of the minor descending channel and the 1.00 Fibonacci projection of the recent decline from 29 Nov 2017 high to 01 Dec 2017 low projected from yesterday, 04 Dec Asian session high of 6388).
  • The hourly Stochastic oscillator has reached an extreme oversold level where the Index may shape a minor rebound at the 6240 intermediate support with key short-term resistance at 6288 (the former minor swing low areas of 30 Nov/02 Dec/04 Dec 2017 (see 1 hour chart).

Key Levels (1 to 3 days)

Pivot (key resistance): 6288

Supports: 6240 & 6208

Next resistance: 6360


Therefore, as long as the 6288 key short-term pivotal resistance is not surpassed, the Index may shape another potential downleg after its minor bounce at 6240 to target the next short-term support at 6208.

On the other hand, a clearance above 6288 shall negate the bearish tone to see a deeper minor rebound to retest the minor descending channel resistance at 6360.

Charts are from City Index Advantage TraderPro


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