Featured Trade: Potential corrective rebound looms for Nasdaq 100

Nasdaq 100 due for a potential corrective rebound after revenue misses on Amazon and Google/Alphabet.

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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