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Charu Chanana
Chief Investment Strategist
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Technical Update - Uptrends likely to have exhausted for Nasdaq 100, SP 500 and Dow Jones Indices
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
- Top and reversal patterns, along with technical indicators, are strongly indicating that the uptrends in Nasdaq 100, S&P 500, and Dow Jones have come to an end, at least in the short term, suggesting an impending correction
- Nasdaq 100 Bear Engulfing pattern was not cancelled and sellers now seem to be in control. Key support at 17,808 could be tested shortly.
USNAS100 CFD support at 17,780
- S&P 500 rejected twice at 5,261. Key support at 5,057
US500 CFD support at 5,048
- Dow Jones Minor double top confirmed. Short-term downside potential to 38,457.
US30 CFD support at 38,450
Nasdaq 100
As highlighted in previous technical updates, the Nasdaq 100 formed a bearish engulfing top and reversal pattern on 8th March. This pattern has not been cancelled and remains in play, despite the fact that the reversal has not yet unfolded.
RSI has been signaling trend exhaustion by showing divergence for some time, and with the recent gap lower, the reversal might now be commencing.
A test of key strong support at around 17,808 is likely. A daily close below this level could lead to further selling, potentially down to around 17,478.
For the Nasdaq 100 to negate the top and reversal pattern, a daily close above 18,417 is required. If that scenario plays out, although it appears unlikely, there is short-term upside potential to 18,812, which corresponds to the 1.618 projection of the sideways trading range observed over the past few weeks.
USNAS100 CFD levels: Key strong support at around 17,780. Could be tested shortly. A break below could push USNAS100 lower to 17,315-17,160
To resume uptrend a close above 18,417 is needed The S&P 500 has been rejected at its previous peak of 5,261 twice. RSI has been signaling uptrend exhaustion for quite some time.
With the index closing yesterday below its lower rising trendline, a correction scenario is likely to unfold.
Key strong support at around 5,057 could be tested. A daily close below this level is likely to fuel a sell-off down to around 4,845, which is close to the 0.382 retracement of the uptrend since October 2023 at 3,819.
To negate this top and reversal scenario, a daily close above 5,261 is necessary. If that occurs, the S&P 500 could push higher to around 5,483
US500 CFD levels: Currently trading below lower rising trendline. Key strong support at 5,048. Minor support at 5,148.
Strong support at around 4,953-4,919 and 4,841.
A close above 5,277 uptrend is to be extended with potential to around 5,480
The Dow Jones Industrial Index has formed a short-term, minor double-top pattern. With the close yesterday below 39,277, the top and reversal pattern is confirmed, with potential to test key support at around 38,457. A close below that level is likely to fuel a sell-off down to support at around 37,778.
To negate this reversal pattern and resume the uptrend, a close above 39,889 is necessary.
US30 CFD levels: Support at 38,450 and 37,778. A daily close above 39,988 will demolish the top and reversal pattern.
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