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by Charalambos Pissouros

Nasdaq 100 Slides and Hits Support Near 6940

Nasdaq 100 tumbled yesterday, falling below the support (now turned into resistance) of 7060. That said, the slide was stopped near the 6940 hurdle, defined by the low of March 8th, and then the index rebounded somewhat. Today, ahead of the US opening, the cash index continued to recover, and at the time of writing, it looks to be heading to test the 7060 barrier from underneath. Overall, the price structure continues to be of lower highs and lower lows below the downside line drawn from the high of May 3rd, and thus, we will maintain our bearish view with regards to the near-term outlook.

The index could continue to recover for a while more, even above 7060, with the next potential areas of resistance resting at around 7130 and 7185. However, as long as the price continues to trade below the aforementioned downside line, we would see a decent chance for a U-turn back south and perhaps another test near 6940. If, at that point, that zone fails to halt the slide, its break would confirm a forthcoming lower low and could pave the way towards the low of February 8th, at around 6835.

Shifting attention to our short-term oscillators, we see that the RSI rebounded and exited its below-30 territory, while the MACD, although below both its zero and trigger lines, has started to bottom. These indicators suggest weakening negative momentum and support the case for some further recovery before, and if, the next negative leg materializes.

In order to start examining the case of a short-term trend reversal to the upside, we would like to see a break above 7270. Such a move would also bring the index above the downside line drawn from the high of May 3rd, and might allow upside extensions towards the 7370 zone, marked by the highs of May 24th and 28th. Another break, above 7370, could allow the recovery to continue towards 7475, a resistance defined by the peak of May 21st.

Nasdaq 100 cash index 4-hour chart technical analysis


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