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Nasdaq 100 Technical Forecast for the Week Ahead

Nasdaq 100 Technical Forecast for the Week Ahead

2019-08-28 18:00:00
Peter Hanks, Analyst
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Nasdaq 100 Price Forecast:

  • The Nasdaq 100 treads narrowly above an important trendline from December, but has carved out a series of higher lows that could assist the journey higher
  • Heightened volatility and a confined trading range has allowed the major US indices to coil like a spring, now traders will await a break
  • Interested in equities? Sign up for our Free Weekly Equity Webinar in which critical technical levels and fundamental themes are analyzed each week.

Nasdaq 100 Price Forecast for the Week Ahead

The Nasdaq 100 finds itself trading timidly higher than an ascending trendline from December on Wednesday, which has helped the tech-heavy index to carve out a series of higher lows that could serve to bolster the case for a bullish continuation. That said, the fundamental backdrop is far from certain – barring a resolution on potential French digital taxes– which has helped to keep volatility heightened and resulted in violent price fluctuations. Without a concrete shift in the fundamental landscape, many traders will look to technical levels for insight but market conditions have stocks coiled like a spring.

S&P 500 Price Chart: Daily Time Frame (January 2017 – August 2019) (Chart 1)

S&P 500 price chart and VIX index

Chart created with TradingView. VIX overlaid in green.

Looking to the S&P 500 and VIX Index as a thermostat for general stock volatility, heightened fear and a lack of progress in a single direction have created price action reminiscent of November 2018 – albeit to a lesser degree. Nevertheless, the persistent lack of clarity may see the choppiness continue until a breakout is staged. With the substantial risk of fundamental developments at any time via Twitter, forecasting the direction of a potential breakout is exceedingly difficult. With that in mind, here are the Nasdaq 100 technical levels to watch in the event of a breakout in either direction.

To the topside, resistance is relatively robust with a series of recent highs helping to stall advances at the 7,596 and 7,774 levels – the latter of which is effectively the upper bound of the Nasdaq’s range in August. Consequently, the Nasdaq would have to comfortably surpass the 7,774 level to constitute a breakout which would then open the door higher to test the ascending trendline from March around 7,900.

Nasdaq 100 Price Chart: 4 – Hour Time Frame (June – August) (Chart 2)

Nasdaq 100 Technical Forecast for the Week Ahead

Chart created with TradingView

On the other hand, the inability of bulls to surmount the 7,774 level on numerous attempts does not spark confidence. Therefore, until a new high is tagged above the level, short-term gains may be relatively contained as the Index runs out of space between the ascending trendline and topside resistance. Should support around 7,527 and 7,440 fail, subsequent buoyancy may reside around 7,358 marked by the Nasdaq’s low on August 5. Sustained price action beneath initial three areas of support would likely constitute a break of the recent range and could see the Index look to 7,216 for emergency support.

Interested in longer-term trades? Check out our Quarterly Forecasts for our top trades on Gold, the Dow Jones, EURUSD and more.

Either way, the Index’s position between technical levels does not offer a particularly attractive risk-reward profile at present. Thus, it may be prudent to wait for confirmation of a new high or new low – or a significant technical development on the Dow Jones or S&P 500 - before exploring a position. In the meantime, follow @PeterHanksFX on Twitter for fundamental updates and technical analysis.

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

Contact and follow Peter on Twitter @PeterHanksFX

Read more:Gold Price Forecast: Rally to Receive Boost from Massive ETF Holdings

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