The Nasdaq100 index was once again the main driver of growth in US indices in May, indirectly also positively influencing markets elsewhere. On Thursday, the index was approaching the 19,000 level, adding over 11% to the 19 April lows. An impressive wave of selloffs hit the market, taking 2% off the index from peak to bottom. And now, the legitimate question is, are we seeing the beginning of a long correction?
Technically, the Nasdaq100 index is at the threshold of the overbought zone on RSI on daily timeframes. Contrary to the name, entering this area is more likely to see the most intense growth, although the least unpredictable. Buyers’ interest is supported by the fact that the index is now only 1% above the previous peak. After that peak, there was already an April correction that removed much of the market’s short-term overheating.
The correction in July-October last year fits into a classic Fibonacci pattern, bringing the Nasdaq100 index close to 61.8% of the original rally and one hair away from the 200-day moving average. This should classically be followed by a rally to 161.8%, around 19200.
So, the Nasdaq100 is a little short of an important resistance area. But it is quite possible that it simply pauses to consolidate forces before a new leap upwards.
However, without a dramatic change in sentiment or a dramatic deterioration of economic data, we should not expect a steady decline in equity indices. The last downward impulse was short-term profit-taking provoked by a new batch of strong macroeconomic data. They suggest tighter monetary policy, but that is not a sufficient reason to start a bear market in equities.
Still, it is worth noting that a drop below the previous consolidation at the top near 18300 could be an important technical signal of a trend reversal.
The FxPro Analyst Team
- GBPUSD broke support zone - Likely to fall to support level 1.2465 GBPUSD currency…
- USDCHF broke resistance zone - Likely to rise to resistance level 0.9000 USDCHF currency…
The decline in EURUSD was driven by weak PMI figures, with France and Germany both…
Gold has reached record high in euro above 2600, and growing fast in dollar terms…
The crypto market is booming as the anticipation of regulatory changes grows. Bitcoin nears $100K,…
- GBPCAD broke support zone - Likely to fall to support level 1.7500 GBPCAD currency…
This website uses cookies