Index in focus: Nasdaq 100 summer recovery at risk

US indices are trading fairly quietly for the second straight day as traders soak up the end of the summer and avoid getting too committed ahead of Fed Chairman Jerome Powell’s keynote address at the Jackson Hole Economic Symposium on Friday (see our full preview of the highly-anticipated event here).

The pause gives us an opportunity to establish the key levels to watch on one of our most-widely traded indices, the Nasdaq 100 (US Tech 100). As the chart below shows, the index rallied nearly 25% off the June lows to last week’s peak, but sellers have aggressively pushed prices down in recent days, leaving the Nasdaq 100 testing a key previous support/resistance zone around 12,900. This area put a floor under prices in March and April, and once the index broke below it, it acted as resistance in early June; coincidentally, the 50-day EMA also sits in the upper 12,000s, strengthening the importance of that area for technical traders:

Source: StoneX, TradingView

Interestingly, our traders have flipped back to a bullish position in the index following last week’s selloff. According to our internal data, roughly two-thirds of the outstanding volume on the StoneX Retail platforms (FOREX.com and City Index) was on the short side throughout last week; this week, that’s flipped to about 60% net long, suggesting that our traders are expecting a bounce in the index on balance.

Will they be correct in their (slight) bias? Time will tell, but given the weakness in other risk assets and our expectation of a relatively hawkish speech from Chairman Powell on Friday, we wouldn’t be surprised to see a break lower heading into September. In that scenario, the next level of support to watch would be around 12,200.

Meanwhile, a confirmed bounce from this key level could take the index back toward the summer highs and the 661.8% Fibonacci retracement of the March-June fall at 13,700 in September.

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.