NASDAQ Top Is Seen Around 10500/600

03 July 2020

NASDAQ rallies to another high around 10430 levels yesterday. Unlike its counterpart indices SPX500 and the Dow Jones, NASDAQ has been in a religious uptrend since March 23 lows around 6639. The index has appreciated from 6630 lows to 10430 in just 13 weeks’ time.

NASDAQ has defied all resistance clearing above its all-time highs at 9750 levels with ease. Looking at the rally since 6630 lows, it is nothing but a simple uptrend, carving a series of higher highs and higher lows.

The recent rally can be technically defined as a Bearish Divergence. While most of it counter indices like SPX500 and Dow Jones have struggled to reach near their all-time highs, NASDAQ has print way above 9750. This phenomenon can be defined as bearish divergence indicating a potential change in the existing trend.

It might not be the right time to get too optimistic with NASDAQ trading near its all-time highs around 10400 as we prepare this article. It could be just a matter of time before the indice could reverse sharply lower, breaking below the trend line support.

Looking at the wave structure since March 23, 2020; NASDAQ might have completed an impulse wave, sub dividing into 5 waves (not labelled today), between 6630 and 10430 respectively. A major top could either be in place around 10430 or very close to forming around 10500 levels.

Most traders might be willing to remain flat and allow NASDAQ to break below immediate price support at 9743. Thereafter, we can plan to sell on rallies against the swing high. It is good to remain flat and stay aside for now and allow price action to confirm a bearish move.

Prepared by
Technical Analysis Team

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