Bulls Look to Hold Support as Index Turns Lower

Nasdaq 100 Price Outlook:

  • The Nasdaq 100 possesses an encouraging technical picture compared to the Dow Jones
  • Yet volatility remains widespread and stocks pressured as the S&P 500 triggered another circuit breaker
  • Should support fail, the Nasdaq may look for secondary assistance around the 2018 lows

Nasdaq 100 Forecast: Bulls Look to Hold Support as Index Turns Lower

Stocks resumed their decline in the second half of Wednesday trading as the S&P 500 fell 7% to trigger the first level circuit breaker. Should further losses occur, subsequent triggers reside at the -13% and -20% marks – the latter of which would halt trading for the remainder of the session.

At present, a direct catalyst behind the most recent leg lower is not readily apparent, but significant volatility in the foreign exchange market could suggest liquidity concerns. Either way, a single catalyst isn’t necessarily required with the VIX continually trading at extremes, a sign investors remain uncertain about the future.

Nasdaq 100 Price Chart: Daily Time Frame (August 2018 – March 2020)

Nevertheless, the Nasdaq 100 will look to employ technical support around 6,940 which has recently suffered a modest break beneath. However, if bulls can post a daily close above the level on Wednesday, it should provide a modicum of support to round out the week. That being said, the exploratory price action beneath the line has assuredly undermined its influence which may see the tech-heavy index fall further.

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To that end, secondary and tertiary support may reside around the 6,500 and 5,800 levels respectively – the latter of which marks the index’s 2018 swing low. It is also important to note the index stands on the threshold of oversold territory via RSI – which has consolidated somewhat could see it turn lower once more. Therefore, the Nasdaq appears highly vulnerable at its current level and could threaten to fall further. Since directional moves in the current landscape are exceedingly difficult to predict, volatility and developments in other assets like the foreign exchange, commodity and bond markets should be watched closely for possible insight.

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–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

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