Thursday’s Technical Analysis For: NAS Composite Index (100)

The NAS 100 traders look to be doing the same thing over and over again.

The last kick-back rally began at the end of August ended at 4435/50 the Key resistance on 17 September, a mark that the market was turned back.

As can be seen from the chart, below, this marked the convergence of previous support and a Bearish trend line with the 50-Day MA. This resistance area was located in between the Key 61.8 and 78.6% Fibo retracement marks of the downswing from last Summer’s multi-year highs.

The fall from this 4435/50 resistance area ended when the index pulled back to 4050, a mark in between the 61.8 and 78.6% Fibo retracement marks of the upswing from the August lows.

Wednesday, the index saw resistance in between these same Fibo retracement marks of the most recent downswing.

If history repeats itself and the index turns lower from here as it looks like it might then this Fibo pattern projects a move South to somewhere between 4114-4163, these are the 61.8 and 78.6% Fibo retracement marks of this recent upswing to Wednesday’s high.

In addition to the Fibo marks, the NAS 100 is facing additional resistance at 4340, a pivotal support and resistance level in the past, and the downward-sloping 50-Day MA at 4342.

The 50-Day MA has dropped below the 200-Day MA making create a Death Cross.

Many see this crossover as a confirmation of the downward trend, implying that this group of market participants will be looking to sell into the rallies, and not buy the dips.

The Big Q: Is this Bearish?

The Big A: If by the close of play Thursday we have a Bearish looking candle on the daily, such as an Inverted Hammer, then this would suggest that further losses could be on the way Thursday, and beyond.

On the other hand, if the index rallies off these marks and closes decisively higher on the day then it may go on to take out the resistance. It would be a Bullish outcome if the NAS 100 manages to break above the downward trend line in one of these sessions.

We wait and see.

Position: Neutral, waiting for direction

Stay tuned…

HeffX-LTN

Paul Ebeling