The Nasdaq 100 Index Futures (CME: NQ) has painted the town red, surging over 4% in just two weeks and reaching a record high of 17,538. Chip giants like TSMC and AMD, fuelled by AI optimism, led the charge, while megacap names like Apple and Microsoft chipped in their fair share. Lower Treasury yields added further wind to the tech sails, propelling the index on its triumphant ascent. This resilience in the face of recent market choppiness speaks volumes about the Nasdaq’s inherent strength and investors’ faith in the sector’s long-term growth potential.
Technical
The 4-hour chart paints a picture of bullish dominance. Price action soars above the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line), all comfortably ascending. The upward-sloping SMAs paint a picture of sustained momentum, further bolstered by an overbought RSI of 78.08, which also hints at a potential short-term pullback before the upward charge resumes.
With the RSI at overbought levels, there exists a potential for short-term pullback before the index resumes its upward trajectory, which could offer short-term trading opportunities towards the 23.60% Fibonacci retracement level (17,361.50). A break below the initial support would offer short-term trading opportunities towards the 50.00% Fibonacci retracement level (17,129.5) and 61.80% Fibonacci retracement level (17,025.25).
However, the resumption of the upward push could offer short-term trading opportunities towards the 17,653.75 resistance level higher. A break above the initial resistance would bring the 17,747.50 and 17,850.00 resistance levels into play in the short term.
Summary:
The Nasdaq 100 is riding a wave of tech euphoria, but a technical correction might be brewing. Bulls can aim for a break above the 17,653.75 resistance for further gains, while bears can eye retracements towards the 50.00% and 61.80% Fibonacci levels should the 23.60% Fibonacci level give way.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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