Nasdaq 100 Technical: Exhaustion at key resistance

• The outperformer Nasdaq 100 seems to have hit a roadblock/resistance at around 14,380.
• Price actions formed a daily bearish “Gravestone Doji” candlestick right at the upper boundary of the “Ascending Wedge” configuration.
• 14,380 key graphical resistance confluences with the 61.8% Fibonacci retracement of the prior major downtrend from 22 November 2021 all-time high to 13 October 2022 low.

Fig 1: US Nas 100 daily trend as of 31 May 2023 (Source: TradingView, click to enlarge chart)

Fig 2: US Nas 100 4-hour trend as of 31 May 2023 (Source: TradingView, click to enlarge chart)

The US Nas 100 Index (a proxy for the Nasdaq 100 futures) has staged a stellar up move seen in the past four weeks where it rallied by +24.50% from its 13 March 2023 minor swing low of 11,676 to yesterday, 30 May high of 14,533; outperformed the other major US benchmark stock indices (S&P 500, Dow Jones Industrial Average & Russell 2000) by a wide margin.

Bearish elements have been sighted at around a key resistance level

Interestingly, this steep up move has reached a key resistance level at around 14,380 which is defined by a confluence of elements; the upper boundary of the medium-term bearish “Ascending Wedge” configuration in place since 28 December 2022 low and the 61.8% Fibonacci retracement of the prior major down move from 22 November 2022 all-time high to 13 October 2022 low.

In addition, several exhaustion elements have emerged as well as the price actions of the Index hit the 14,380 key resistance level. Yesterday, it formed a daily bearish “Gravestone Doji” candlestick pattern coupled with an overbought bearish divergence signal seen on its lower time frame, 4-hour RSI oscillator.

At the risk of a potential mean reversion decline

These observations suggest that the up move from the 13 March 2023 low has started to lose bullish momentum where the odds have increased for a potential mean reversion decline in the first step.

Key medium-term pivotal resistance will be at 14,540 (an excess above 14,380) with near-term supports coming in at 13,910 followed by 13,550.

On the flip side, a clearance above 14,540 sees the next resistance at 15,270 (76.4% Fibonacci retracement of the prior major down move from the 22 November 2022 all-time high to the 13 October 2022 low & swing highs of 2 February/30 March 2022).

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