Chart of the day Nasdaq 100 reacted off resistance with bullish exhaustion signals

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By :  ,  Financial Analyst

Short-term technical outlook on Nasdaq 100 (Wed, 17 Aug 2017)



What happened earlier/yesterday

The U.S. Tech 100 Index (a proxy for the Nasdaq 100 futures) had staged a recovery of close to 3% from last Friday, 11 August 2017 low of 5759 as the tensions between U.S. and North Korea over its nuclear related missile test launches started to ease off.

Interestingly, negative technical elements had emerged after yesterday’s (16 August) initial rally seen in the first half of the U.S. session to print a high of 5945 before the release of the Fed FOMC minutes of its July’s monetary policy meeting.

Let us now review its shorter-term technical elements.

Key elements

  • Since its current all-time high of 5995 seen on 27 July 2017, the Index has started to consolidate in an “Expanding Wedge” range configuration (depicted in brown) (see 1 hour chart)
  •  Yesterday’s price action has staged a retreat right at the upper boundary (resistance) of the aforementioned “Expanding Wedge” at 5945. It has also formed a daily “Doji” candlestick pattern at the 5945 resistance and a similar price action pattern was seen on 08 August 2017 prior to the recent 3% decline towards last Friday’s low. In addition, the hourly RSI oscillator has flashed a bearish divergence signal. These observations suggest the upside momentum of the push up in price action from last Friday’s low has started to ease.
  • The intermediate support now rests at 5865 which is defined by the former minor congestion range bottom as seen from 28 July to 09 August 2017 with the key short-term support at last Friday’s swing low area of 5763.
  • The key medium-term support rests at the 5725/5665 zone which is defined by lower boundary of the aforementioned “Expanding Wedge”, pull-back support of a former descending trendline from 08 June 2017 high and the 61.8%/76.4% Fibonacci retracement of the recent rally from 04 July 2017 low to its current all-time high printed on 27 July 2017.

Key Levels (1 to 3 days)

Pivot (key resistance): 5945

Supports: 5865 & 5763

Next resistance: 5995

Conclusion

As long as the 5945 short-term pivotal resistance is not surpassed, the Index may shape a potential slide to test its intermediate support at 5865. An hourly close below 5865 is likely to open scope for a deeper decline to retest last Friday’s swing low area of 5763.

Also, the Nasdaq 100 is now leading the up move among the major benchmark U.S. stock indices (refer to the last chart), thus if Nasdaq 100 starts to shape a bearish reversal at this juncture, the rest of the major indices (Dow Jones, S&P 500, Russell 2000) are likely to follow its path to the downside.

On the other hand, a clearance above 5945 should invalidate the preferred short-term bearish bias for a squeeze up to retest its current all-time high level of 5995.

Charts are from City Index Advantage TraderPro & eSignal

Disclaimer

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Related tags: Indices US

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