Nasdaq 100 Technical Index:
- Nasdaq It breaks 100 above the key technical resistance at 13,740 and rises to its best level since April 2022.
- While the technical backdrop looks constructive, the market appears to be stretched and close to an overbought state, which indicates that a pullback should not be ruled out in the near term.
- This article looks at the key levels of the NDX to watch over the coming days
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The Nasdaq 100 (NDX) extended its advance and made another decent rally on Thursday, breaking resistance at 13,740 and setting a new 2023 high in the process, suggesting that buyers remain in control of the market on Wall Street, undeterred by economic challenges. Landscapes and headwinds loom.
In late afternoon trading, the technology-focused index rose 1.3% to 13,823, its best level since April 2022, helped by strong performances from Nvidia and Alphabet during the session. With these gains, the Nasdaq 100 has managed to climb more than 24% since the start of 2023, defying gravity and the doom-and-gloom narrative.
From a price action standpoint, the Nasdaq 100 is still in an uptrend even though most of its year-to-date gains have been driven by big tech. In any case, the index has posted higher highs and higher lows in recent months, crossing both its 200- and 50-day simple moving averages, two major bullish developments according to Technical Analysis.
Despite the constructive bias, caution is needed as the market appears to be stretched and close to an overbought state, as evidenced by the 14-day RSI. The last four times this oscillator has reached extreme readings near or above the 70 threshold, a sell-off occurred shortly thereafter. Traders should keep this in mind in the future.
Focusing on possible scenarios, initial support is located at 13,740 in case of a relapse. If this floor is removed, selling pressure could build, paving the way for a drop towards 13,350. On further weakness, focus moves down to the psychological level of 13,000.
On the other hand, if the recent breakout continues and prices remain above 13,740, the bulls may become bolder to launch an attack on 14,370 shortly after consolidation (this level corresponds to 61.8% Fibonacci retracement of the 2021/2022 sell-off.
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