NASDAQ 100 INDEX FUNDAMENTAL OUTLOOK – NEUTRAL
- Nasdaq 100 Index forms a bearish “AB=CD” pattern and has since then entered consolidation.
- The index key support level may be found trading at 11,520, a 50-day Simple Moving Average line
- The mid-term trend seems bullish biased, yet the “Double Top” might slow down the upside trend
The Nasdaq 100 index most likely formed the “AB=CD” Bearish pattern back in September and has from then entered into a consolidation period. The index has pulled back about 5% from the 12, 250 peaks, hitting the immediate support point at the 50-day SMA before it bounced back as shown on the following chart. Incase the 50-day SMA doesn’t hold, the index could decline further in order to test the next key support point at 11,465 Fibonacci (76.4% retracement).
The “AB=CD” pattern is a classic pattern and seems to be a building block for a more sophisticated pattern. The “AB=CD” pattern is formed by the parallel AB or CD legs that are the same in length and timeframe. The bearish “AB=CD” pattern was created by 2 ascending CD and AB legs and is often followed by the correction after level D.
Nasdaq 100 Index Chart
This index just slipped under the new 20-day SMA that’s also the mid-point line of the Bollinger Band. If the price enters into the lower half of this Bollinger Band, it often signals an extra downtrend potential since the mid-term momentum has most likely turned bearish. On the other hand, the MACD indicator formed the “Death Cross”, signifying that a downside pressure might prevail in the next few days.
Based on the weekly trend, the Nasdaq 100 seems to take a break after posting an 87% rise from March to august as shown on the chart below. The main trend is still bullish biased, with the most recent consolidation possibly paving way for higher highs. A 10-week line might serve as the key support, closely followed by a 20-week simple moving average line.
In the short term, any failure to great over last month’s high trading at 12,260 might result in a “Double Top” channel on a weekly chart that might result in a deeper rebound.
Nasdaq 100 Index – Weekly Chart