Nasdaq 100 Trades Within a Range | Technical Analysis

The Nasdaq 100 cash index traded higher yesterday, after it hit support near 7785, but the recovery was stopped near the 7880 barrier, fractionally above yesterday’s peak. Overall, the index has been trading in a sideways manner between 7785 and 7950 since September 11th and thus, we would consider the near-term outlook to be neutral for now.

In order to start examining whether the picture has turned negative, we would like to see, not only a dip below the range’s lower end, but also a break below the 7740 level, defined as a support by the low of September 10th. Such a move may allow declines towards the 7660 territory, marked by an intraday low formed on September 4th, the break of which is likely to extend the slide towards the key hurdle of 7580, which provided decent support on September 2nd and 3rd.

Shifting attention to our short-term oscillators, we see that the RSI has been oscillating around its 50 mark for a while, and now sits very close to that equilibrium level, while the MACD lies near both its zero and trigger lines. These indicators suggest lack of directional momentum and support our choice to remain sidelined until the index exits the pre-discussed range.

On the upside, we would like to see a strong move above 7950, the upper bound of the range, before we start examining whether the picture has turned back positive. This may encourage the bulls to push towards the psychological round number of 8000, or even the index’s all-time high, at 8034.50. Another break, above that record number, would bring the price into unchartered territory, with a possible resistance zone being the 8100 area.

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