The Nasdaq 100 Index: Key Levels to Watch as Chart Signals Easing Upward Momentum
The tech-heavy Nasdaq 100 Index has been on a tear, hitting record highs and rising nearly 8% in the second quarter. Wall Street’s unwavering enthusiasm for the artificial intelligence (AI) narrative has been a driving force behind the surge in stocks linked to technology. As we move into the third quarter, it’s essential to keep an eye on key levels and indicators to gauge the index’s momentum.
Indicators Signal Easing Buyside Pressure
Despite the Nasdaq 100 Index reaching new highs, there are signs of slowing momentum. Trading volume, while still above longer-term averages, has been declining in recent days. This could be attributed to the shortened trading week, impacting market activity. Additionally, the relative strength index (RSI) has shown a bearish divergence as the price reached higher highs, indicating a decrease in buyside pressure.
Monitor These Key Levels During Retracements
During retracements or periods of profit-taking, investors should pay close attention to key support levels on the chart. The first level to watch is around 19,500, which may find support from last week’s low. If the index dips below this level, the next area of interest is around 18,900, where a horizontal line connecting prices from late May to early June could act as support.
Further downward movement could see a retest of the 18,400 region, where buyers may step in near a trendline linking previous all-time high points. A broader correction in technology stocks could potentially lead to a fall to the April low at 16,974, just below the 200-day moving average.
Potential Longer-Term Upside Price Target
For those looking at longer-term upside potential, a bars overlay pattern projecting from the index’s trending move between October 2023 and March this year suggests a price target of around 22,000. This projection provides insight into potential future price movements based on historical trends.
It’s important to note that the comments, opinions, and analyses expressed are for informational purposes only. Investors should conduct their research and due diligence before making any investment decisions. As of the date of writing, the author does not hold any of the securities mentioned.
As we navigate through the third quarter, keeping an eye on these key levels and indicators will help investors stay informed about the Nasdaq 100 Index’s momentum and potential price movements. Stay tuned for updates on this evolving market trend.
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