Nasdaq 100: Bulls on the Back Foot as 50DMA Gives WayOur Nasdaq 100 contract is looking heavy. Very heavy.
The price action has been increasingly unconvincing for bulls in November, culminating on Monday with the price closing beneath the 50-day moving average for the first time since April. That’s a noticeable departure from what was seen when tested in the recent past, with the price often reversing higher immediately after. Not on this occasion.
Should the price remain below the 50-day moving average, the next focal point is uptrend support that’s been in place for over six months. In each of the past two sessions the price has traded through the level only to reverse higher, attracting buyers on dips beneath 24650—that’s the battleground to watch in the near term.
If the price were to close beneath uptrend support and 24650, it would bolster conviction that a deeper downside flush may be coming, allowing for shorts to be established with a stop above the uptrend to protect against reversal. 24000 provided support and resistance earlier this year, making it a potential initial target.
Of course, should the price remain above the uptrend, the setup could be flipped with longs set above it or the 50DMA, should the price reclaim it. 25200, downtrend resistance from the record highs, or 25715 are all potential targets. Given the unconvincing price action recently, an obvious bullish reversal signal would be preferable before considering long setups.
The message from RSI (14) and MACD is tilted lower when it comes to directional bias, with the former trending beneath 50, indicating building bearish pressure. MACD remains in positive territory, although having already crossed the signal line from above, at the very least it’s indicating waning topside strength. Given its trajectory, it may soon confirm the bearish signal.
Good luck!
DS
