Nasdaq 100 - The market is undecided about where to go next

The Nasdaq 100 index showed some relief yesterday after plunging on the FOMC minutes announcement. However, after the market close, the Nasdaq index gave up almost all of its gains in a flash crash. The price action has been choppy over the past week, and the market seems undecided about where to go next. We remain bearish and expect the downtrend to unravel further in the coming month. However, after more than six weeks of selling, the market strives to find some relief; therefore, we are on the lookout for a bear market rally. Although, we voice caution that this is nothing unexceptional in the bear market, and we may see the continuation of selling into this and the following week. Therefore, we will pay close attention to the sloping resistance and the downward sloping channel in which NQ1! appears. Our price target for NQ1! stays at 11 500 USD; a breakout above the sloping resistance in the Illustration 1.01 would force us to abandon our short-term price target.

Illustration 1.01

The picture above portrays alternative scenarios for the Nasdaq 100 index. A breakout above the sloping resistance will imply bullishness; however, we voice caution as it could potentionally end up as another bull trap. Moreover, anxiety among market participants remains highly elevated as retail investors continue to buy dips and institutional players sell their assets. As a result, we expect the volatility to stay persistent in the coming month.

Technical analysis - daily time frame
RSI, MACD, and Stochastic are neutral. DM+ and DM- stay bearish, and ADX remains elevated. Overall, the daily time frame is neutral.

Illustration 1.02

The picture shows a downward sloping channel indicated by yellow dashed parallels. Breakout below the channel is bearish and increases the index's odds of a flash crash. We will pay close attention to the price and whether it will manage to stay above the channel. If not, it will imply more selling pressure.

Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame remains bearish.

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

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We pay close attention to the resistance displayed in the chart. Another subject of interest is volume.

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