Nasdaq 100 Technical: Short-term bearish tone may still linger on

  • Ex-post Apple and Amazon earnings results reinforced the current +1.4% rebound seen on Index from its 3 August 2023 low in today’s 4 August Asian session hours.
  • The ongoing rebound is still not showing any clear signs of a reversal from its current short-term downtrend phase in place since 29 July 2023 as price actions remained below the 20-day moving average.
  • Medium-term momentum has turned bearish as indicated by the bearish divergence condition seen in the daily RSI at its overbought region which may see a further extension of the current short-term downtrend phase.
  • Key short-term resistance to watch will be at 15,600.

This is a follow-up analysis of our prior report, “Nasdaq 100 Technical: “Bullish exhaustion sighted” published on 24 July 2023. Click here for a recap.

The price actions of the US Nas 100 Index (a proxy for the Nasdaq 100 futures) have shaped a decline of -3.6% from its 29 July 2023 high of 15,818 to print a recent intraday low of 15,255 on 3 August reinforced by a significant surge in longer-term US Treasury yields triggered by the aftermath of Fitch’s US sovereign debt credit rating downgrade to AA+ from AAA.

In today, 4 August early Asian session; the two US mega-cap technology firms; Apple and Amazon reported their respective earnings results for the quarter that ended June 2023. Ex-post earnings results release saw the share price of Apple tumble by -2% in the after-hours trading session due third consecutive quarter year-on-year revenue decline hampered by lacklustre demand for iPhones, Mac laptops, and iPads.

In contrast, the share price of Amazon soared by +8.7% in after-hours trading reinforced by its biggest earnings beat since Q4 2020 assisted by significant cost-cutting measures implemented in the prior two quarters.

The overall net effect is a rebound of +1.4% seen on the US Nas 100 Index from its 3 August 2023 low of 15,255 to today’s 4 August Asian session intraday high of 15,441 at this time of the writing.

Medium-term momentum has turned bearish

Fig 1:  Nasdaq 100 medium-term trend as of 4 Aug 2023 (Source: TradingView, click to enlarge chart)

The daily RSI oscillator has flashed a bearish divergence condition (lower highs in RSI in contrast with higher highs in the corresponding price actions of the Index) at its overbought region which suggests that the medium-term uptrend phase of the Index in place since 28 December 2023 low of 10,675 may have reached a terminal point at the 15,690/15,810 key medium-term resistance.

The odds now have increased for a potential multi-week corrective decline to retrace a portion of the medium-term uptrend in the first step if 15,260 near-term support fails to hold (also the 50-day moving average).

Still below the 20-day moving average

Fig 2:  Nasdaq 100 minor short-term trend as of 4 Aug 2023 (Source: TradingView, click to enlarge chart)

The ongoing rebound from its 3 August 2023 low of 15,255 has not surpassed its 20-day moving average which is acting as an intermediate resistance at 15,510/15,540.

Watch the 15,600 key short-term pivotal resistance (also the 61.8% Fibonacci retracement of the decline from the 29 July 2023 high to the 3 August 2023 low) to maintain the short-term downtrend to retest 15,260 and a break below it exposes the next support at 15,110 in the first step.

On the flip side, a clearance above 15,600 invalidates the short-term bearish tone for a retest on the 15,810 key medium-term resistance.

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Kelvin Wong

Kelvin Wong

Senior Market Analyst, OANDA 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.