The Nasdaq 100 is forming a textbook downtrend pullback setup on the 4-hour chart? Will the sellers bounce again in or is there an upside breakout forward?
Nasdaq 100 (NAS100): 4-Hour Foreign exchange Chart by TradingView
On the 4 hour chart above, we will see NAS100 has been trending decrease, which first began all the best way again to only beneath the 16,000.00 deal with in mid-July.
And the current transfer was fairly vital because the early September consolidation changed into an enormous draw back -5% break to only above 14,400.00, akin to navigating a rugged terrain with sudden drops and rocky paths.
However right here’s the place the plot thickens: We’re presently within the midst of a sustained bounce, and now the burning query is whether or not this upward momentum will entice the sellers to re-enter the downtrend as soon as once more?
In fact, the market’s future route will doubtless hinge on this week’s busy macro financial calendar, however from a technical standpoint, there are compelling arguments which will attract sellers as soon as once more.
In case you look at the chart carefully, you’ll discover a convergence of technical elements throughout the 15,000.00 – 15,300.00 vary. It’s a battleground the place easy shifting averages, Fibonacci retracement ranges, and a descending trendline come collectively.
Along with this, the stochastic indicator is signaling probably overbought circumstances within the brief time period. This means that the market may want a second to catch its breath after the current ascent, akin to a runner taking a breather after a dash.
So, right here’s the situation: Ought to NAS100 retrace to that convergence space and unveil bearish reversal patterns, we would witness a resurgence of sellers, pushing the index again into the downtrend. The swing low round 14,400.00 may very well be susceptible, particularly if an influential bearish catalyst emerges this week.
On the flip facet, what if the plot takes an sudden twist? If a potent catalyst surfaces however, as a substitute of repelling, it attracts consumers, then we would witness a sustained climb above the convergence space.
Within the case of a sustained break above the 61% Fibs, 200 SMA and falling trendline sample, the index may very well be on a journey to revisit the September highs round 15,600.00 this week, a believable goal given the common every day true vary of roughly 235 factors.
Whichever bias you select to commerce, be certain that to make use of cease losses and danger administration in your exit methods!
