Nasdaq 100 - Has the Nasdaq 100 index formed double bottom?

Last week, the U.S. Federal Reserve increased interest rates by 25 basis points. Initially, we thought this would put additional pressure on the U.S. economy; actually, we thought this would potentially lead to more weakness in the market. However, the Nasdaq 100 index showed strength instead of a weakness and broke above 14 391 USD resistance level. A sharp drop simultaneously followed this in the volatility index. Such an occurrence substantially improved the recent bearish picture that the Nasdaq 100 index conveyed. Indeed, several technical indicators turned neutral or even bullish at the same time. In addition to that, the hawkish stance of the FED caused market participants to price in future rate cuts. Therefore, in our opinion, it is possible that the Nasdaq 100 index formed a double bottom; actually, we think it is likely for the U.S. stock market to continue a little bit higher from the current level (or go sideways due to the trend turning neutral from bearish). However, we are very cautious, and we will monitor the situation very closely in the following days.

Illustration 1.01

The picture above shows the bullish breakout of NQ1! above resistance at the slope.

Technical analysis - daily time frame
RSI and Stochastic are bullish. MACD points to a bullish direction, although it still remains within the bearish territory. DM+ and DM- recently performed bullish crossover, which bolsters the bullish case for NQ1!. ADX has recently peaked and is now declining; this may suggest choppy price action for NQ1! in the following days. Overall, the daily time frame is neutral, with the first signs of bullish developments taking place.

Technical analysis - weekly time frame
RSI continues to develop a bearish structure. Stochastic managed to reverse, and now it points to the bullish upside. MACD is flattening and which makes it neutral at the moment. DM+ and DM- show bearish conditions in the market. ADX is high, which suggests the trend of higher degree either peaked or near its peak. Overall, the weekly time frame is neutral, with some bullish signs.

Support and resistance

Please feel free to express your ideas and thoughts in the comment section.

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. Your due diligence is highly advised before entering a trade.

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