Nasdaq 100 Technical: Potential short-term bounce on the horizon

  • Recent decline has almost reached the upward-sloping 50-day moving average.
  • Short-term RSI momentum indicator has suggested downside momentum has eased.
  • Potential short-term bounce above 16,160 key short-term support.

This is a follow-up analysis of our prior report, “Nasdaq 100 Technical: Potential start of minor corrective decline” published on 21 December 2023. Click here for a recap.

The US Nas 100 Index (a proxy for the Nasdaq 100 futures) has tumbled towards the 16,160/125 intermediate support as highlighted in our earlier analysis as it hit an intraday low of 16,190 last Friday, 5 January after a bearish reaction off the 16,990 intermediate resistance post-Christmas with a current all-time high level of 16,999 printed on 28 December 2023.

So far the Index has declined by -4.76% from its 28 December 2023 all-time high level in the past week, reinforced by weakness in the share price of Apple recorded a weekly loss of -6.41% last week, and underperformed within the “Magnificent 7” group of mega-capitalization US equities due to two sell-side brokerages performance degrades over potential waning demand for its latest iPhone model.

The decline almost reached the 50-day moving average

Fig 1: US Nas 100 medium-term trend as of 8 Jan 2024 (Source: TradingView, click to enlarge chart)

The 5-day slide has almost reached the 50-day moving average, the former swing high areas of 22 November/29 November 2023 now acting as a pull-back support at 16,160, and the 61.8% Fibonacci retracement of the prior minor uptrend phase from 4 December 2023 low to 28 December 2023 high.

The short-term downside momentum has dissipated

Fig 2: US Nas 100 minor short-term trend as of 8 Jan 2024 (Source: TradingView, click to enlarge chart)

The hourly RSI momentum indicator has flashed a prior bullish divergence signal at its oversold region before a bullish momentum breakout last Friday, 5 Jan which increases the odds of a minor recovery scenario at this juncture as the downside momentum of last week’s decline has eased.

Watch the 16,160 key short-term pivotal support and clearance above 16,435 near-term resistance sees the next intermediate resistance zone coming at 16,500/580 (20-day moving average, former minor ascending channel support & the 61.8% Fibonacci retracement of the decline from 28 December 2023 high to 5 January 2024 low).

However, failure to hold at 16,160 invalidates the recovery scenario to see the continuation of the minor corrective decline within its major uptrend phase to expose the next intermediate support at 15,870/820 in the first step.

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Kelvin Wong

Kelvin Wong

Senior Market Analyst, Asia Pacific at OANDA
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities. Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets. In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.