Nasdaq 100 - Will the FED kill the rally?
Updated
With the barrage of disappointing earnings and the FED rate hike scheduled for today, we have very little to be optimistic about for the rest of 2022. Our reasoning is based on the persistence of high inflation and interest rates poised to stay here for much longer than many analysts initially expected. Therefore, we believe it is a matter of time until something breaks in the market and the price reverses its direction to the downside.
Indeed, with the FED tightening the economy later today, we speculate that this event might lurk just behind a corner. However, it would not surprise us to see one more push higher due to extremely bullish sentiment among retail investors dominated by fear of missing out on “good” deals in the market. With regard to this possibility, we remain bearish on the index and committed to our price targets for QQQ at 270 USD and 260 USD (11 000 USD and 10 000 USD for NQ1!).
Illustration 1.01
Illustration 1.01 displays the setup for QQQ on the daily chart.
Technical analysis - daily time frame
MACD is flattening. Stochastic and RSI are neutral. DM+ and DM- Overall, the daily time frame is bullish but losing momentum.
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
Illustration 1.02
At market lows, we stated that relief was set to follow until the FED meeting, with the VIX index dropping shortly before the decision. Now, we expect volatility to start rising soon unless a positive reaction to the rate hike occurs.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Indeed, with the FED tightening the economy later today, we speculate that this event might lurk just behind a corner. However, it would not surprise us to see one more push higher due to extremely bullish sentiment among retail investors dominated by fear of missing out on “good” deals in the market. With regard to this possibility, we remain bearish on the index and committed to our price targets for QQQ at 270 USD and 260 USD (11 000 USD and 10 000 USD for NQ1!).
Illustration 1.01
Illustration 1.01 displays the setup for QQQ on the daily chart.
Technical analysis - daily time frame
MACD is flattening. Stochastic and RSI are neutral. DM+ and DM- Overall, the daily time frame is bullish but losing momentum.
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
Illustration 1.02
At market lows, we stated that relief was set to follow until the FED meeting, with the VIX index dropping shortly before the decision. Now, we expect volatility to start rising soon unless a positive reaction to the rate hike occurs.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade closed: target reached
Our price targets of 270 USD for QQQ and 11 000 USD for NQ1! were reached yesterday.Trade active
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