Minor Correction Ahead Amid an Ascending Channel?

Minor Correction Ahead Amid an Ascending Channel?

Nasdaq 100 index Technical Forecast: Bearish

  • The Nasdaq 100 index hit an all-time high of 13,879 before entering into a minor correction
  • Prices remain within an “Ascending Channel”, with 20-Day SMA serving as an immediate support
  • The MACD indicator has formed a bearish crossover, suggesting that momentum has turned bearish
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The Nasdaq 100 index reached its all-time high of 13,879 on February 16th before entering a consolidative period. The formation of two long bearish candlesticks however hint at strong selling pressure as prices failed to break a key resistance level of 13,865 – the 161.8% Fibonacci extension. The index appeared to be overstretched after surging nearly 26% from early November to mid-February, rendering it vulnerable to a technical pullback when profit-taking activities kick in.

An immediate support level can be found at the 20-Day Simple Moving Average line (13,530). Breaking below this level may lead to further losses with an eye on 13,362, where the 127.2% Fibonacci extension and the lower bound of the “Ascending Channel” intercept. An even deeper pullback below 13,362 may hint at a near-term trend reversal and thus open the door for further downside potential towards the 50-Day SMA line (13,190) for support.

The overall trend remains bullish-biased, as suggested by upward-sloped moving averages as well as the “Ascending Channel”. Near-term momentum appears biased towards the downside after the formation of a bearish MACD crossover however.

Nasdaq 100 Index – Daily Chart

Nasdaq 100 Chart

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On the weekly basis, the Nasdaq 100 index pocketed an astonishing gain of 107% from late March 2020 until early February 2021(chart below). The overall trend remains bullish-biased, with recent consolidation potentially paving the way for higher highs towards the 200% Fibonacci extension level (14,400). Prices are well supported by 4-, 10- and 20-period SMA lines, suggesting that the medium-term bull trend remains intact.

Nasdaq 100 Index – Weekly Chart

Nasdaq 100 Weekly Chart

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Originally Posted on: https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2021/02/20/Nasdaq-100-Forecast-Minor-Correction-Ahead-Amid-an-Ascending-Channel.html
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