NASDAQ Composite (.IXIC) 100 Forecast: Breaks Out of Recent Consolidation

NASDAQ Composite (.IXIC) 100 Forecast: Breaks Out of Recent Consolidation

NASDAQ Composite (.IXIC) 100 Forecast: Breaks Out of Recent Consolidation

The NASDAQ 100 has rallied significantly during the trading session on Monday, breaking above the 8000 handle. That level was massive resistance, so the fact that we closed above there is a very bullish sign. With that in mind, and the fact that the S&P 500 also rallied above resistance, it suggests that we are in fact going to go looking towards the 200 day EMA above, perhaps even the 50 day EMA which is getting ready to cross below it to form a “death cross.”

The market did get some good news on a health standpoint, as it looks like the market is celebrating the fact that the coronavirus infection rates and deaths are starting to slow down in places like New York City and Italy. Keep in mind that New York City is home of both of these indices that we cover here at FX Empire, so there is a certain amount of “home gaming” when headlines cover New York City. This isn’t to say that it can’t drive the market higher, it’s just that these indices tend to be a little bit more sensitive to New York than anything else.

If we do pull back from here, as long as we stay above the 7450 level, we have the possibility of keeping the uptrend intact over the last couple of weeks. At this point I believe that the market still is probably going to try to fill the gap above that sits just below the 8500 level, so signs of exhaustion there could end up being a nice selling opportunity. 

All that being said, the NASDAQ 100 is highly correlated to technology and therefore it’s very likely that the markets are trying to figure out where to go next but are banking on the fact that a lot of these online companies that are being used so heavily are involved in this index.

In other words, the NASDAQ 100 will probably lead the rest of the market, thereby pulling the S&P 500 higher, perhaps even the Dow Jones Industrial Average. 

All things going on right now point to a lot of volatility, so keep that in mind. The fact that we closed towards the top of the candlestick is a very bullish sign to keep that in mind as well. One thing is for sure, the next couple of weeks are going to see a lot of the sudden moves based upon the latest coronavirus headline.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 8,843.23.

The projected lower bound is: 6,927.18.

The projected closing price is: 7,885.20.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 4 rising windows in the last 50 candles–this makes the current rising window even more bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 49.1790. This is not an overbought or oversold reading. The last signal was a buy 0 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.07. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 16 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 119.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 8 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed up 540.155 at 7,913.238. Volume was 28% above average (neutral) and Bollinger Bands were 43% wider than normal.

Open     High      Low     Close     Volume___
7,660.1747,938.3307,617.7867,913.238 980,152,384
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 7,571.05 8,524.30 8,393.15
Volatility: 80 79 42
Volume: 1,001,554,240 903,547,584 644,996,992

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

NASDAQ COMPOSITE gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
NASDAQ COMPOSITE is currently 5.7% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 29 periods.

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