Featured Trade Potential corrective rebound looms for Nasdaq 100

Short-term technical outlook on US Tech 100 (Fri, 26 Oct)

Key technical elements

The recent impulsive down move structure of the US Tech 100 Index (proxy for the Nasdaq 100 futures) from a high of 7351 printed on 17 Oct 2018 had declined as expected (refer to our previous “Featured Trade” report over here) by 7.8% to hit a low of 6775 on Wed, 24 Oct 2018.
The aforementioned down move has reached an “overstretched” condition where momentum indicators are now flashing signs of an imminent countertrend/corrective rebound to retrace its recent decline
The daily RSI oscillator has flashed a bullish divergence signal at its oversold region coupled with a similar observation seen in the shorter-term 1-hour Stochastic oscillator.
Elliot Wave/fractal analysis suggest that the Index may have one more final push down to complete its minor degree impulsive down move wave 1 in place since 17 Oct 2018 high of 7351 with a potential 5th wave target coming at 6745/6700 (a Fibonacci projection cluster & former swing high area of 26/27 Apr 2018).
The intermediate significant resistance stands at 7000/7050 which is defined by the descending trendline from its 01 Oct 2018 all-time high, former medium-term swing low areas of 28 Jun/11 Oct 2018, 23.6% Fibonacci retracement of the on-going decline from 01 Oct 2018 high to 24 Oct 2018 low & the pull-back resistance of the former primary ascending channel support from Jun 2016 low).

Key Levels (1 to 3 days)

Intermediate support: 6745

Pivot (key support): 6700

Resistances: 6925 & 7000/7050

Next support: 6530/425 & 6295/6160

Conclusion

The recent decline of the Index is now fast approaching a key short-term inflection zone where it may stage a final push down to test 6745 and as long as the 6700 key short-term pivotal support holds, it is likely to shape a potential countertrend/corrective rebound to target the intermediate resistance of 6925 follow by 7000/7050 next.

However, failure to hold at 6700 sees an extension of the impulsive down move towards the next support at 6530/425 (24/25 Apr 2018 swing low area & 76.4% Fibonacci retracement of the recent up move from 09 Feb 2018 low to 01 Oct 2018 high).

Charts are from City Index Advantage TraderPro

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