The break of uptrend support dating back to the start of the artificial intelligence (AI) frenzy in early 2023 may embolden Nasdaq 100 bears to seek a far larger downside unwind than what’s already been seen. Coming on the back of last week’s disintegration of the 200DMA—and with valuations still stretched relative to historic averages while competition in the AI space from China seemingly grows by the day—the technical and fundamental ducks are lining up for such an outcome.
While recent price action has been entirely bearish, sustained directional moves rarely unfold without the occasional countertrend interruption. With RSI (14) now in oversold territory on the daily timeframe and Nasdaq 100 futures finding some buyers between minor support at 19300–19140, this may provide a platform for some form of countertrend squeeze.
If bids continue to repel bears on dips beneath 19,300, longs could be established above the level with a stop below 19140 for protection against a continuation of the prevailing bearish trend. Former uptrend support sits just below 19,900 and looms as a potential trade target. Alternatively, if the price breaks through 19,140 convincingly, bears may set their sights on support at 18,387.
Patience may be required for those considering the setup. Watching USD/JPY for signs of capital flight back into the yen may also be advisable given the skittish environment.
Good luck!
DS
While recent price action has been entirely bearish, sustained directional moves rarely unfold without the occasional countertrend interruption. With RSI (14) now in oversold territory on the daily timeframe and Nasdaq 100 futures finding some buyers between minor support at 19300–19140, this may provide a platform for some form of countertrend squeeze.
If bids continue to repel bears on dips beneath 19,300, longs could be established above the level with a stop below 19140 for protection against a continuation of the prevailing bearish trend. Former uptrend support sits just below 19,900 and looms as a potential trade target. Alternatively, if the price breaks through 19,140 convincingly, bears may set their sights on support at 18,387.
Patience may be required for those considering the setup. Watching USD/JPY for signs of capital flight back into the yen may also be advisable given the skittish environment.
Good luck!
DS
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.