The Nasdaq 100 Index (CME: NQ) continues its upward trajectory and remains on course for a fifth consecutive week of gains after appreciating over 0.9% this week, fuelled by a robust earnings season and persistent expectations of a supportive interest rate environment. Mega-cap tech stocks, including Nvidia, Meta Platforms, Tesla, Microsoft, and AMD, led the recent surge, propelling the index to record highs.
The positive market sentiment is underlined by strong quarterly results from key players like Disney and Arm, reflecting resilience in the US economy. Despite hawkish comments from some Federal Reserve members, the market remains optimistic.
Technical
The 4-hour chart shows that the index is currently at 17,855.00 trading sideways. The recent break above the ascending triangle pattern is bullish, and price action sits comfortably above the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line). However, the RSI hovering around 67.73 suggests the need for caution, indicating overbought conditions that could trigger a pullback.
With the recent break above the triangle accompanied by the RSI near overbought levels, a potential for a pullback and retest is firmly in play, with the 17,772.50 price level likely to act as a significant level in the short term. Short-term trading opportunities towards the 18,000.00 price level could exist should the 17,772.50 price level hold firm. A break above the initial resistance would offer further trading opportunities towards the 18,200 resistance level.
However, a beak below the 17,772.50 price level would leave the 17,568.00 price level as the level of interest lower. A break below the 17,568.00 support level would bring the 17,222.00 support level into play in the short term.
Summary
The Nasdaq 100’s record run reflects investor optimism, but caution remains warranted. Fed policy, economic data, and earnings reports will continue to steer sentiment. While technicals suggest a potential pullback, a decisive break above resistance could fuel further gains.
Sources: TradingView, Trading Economics, Dow Jones Newswire, Reuters.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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