The Nasdaq extended gains by 1.17% early Friday morning as bulls defends the 11700.00 support in the near term. The Nasdaq broke below a 12200.00 which coincides with a 17-month low as the hawkish Fed sent the stock market plunging for weeks. The Corporate earnings have been resilient during the reporting period but a stronger interest has been seen in US 10 year yields as investors shift money into interest-paying assets.
The receding dollar strength has given a boost to the Nasdaq index ahead of next week’s US FOMC meeting minutes. Traders will also pay attention to USD GDP data next week Friday. The week will also be coupled with major earnings in the corporate sector.
Nasdaq index breached the 12200 support, a 17-months low as selling pressure renews. A close below the 12200 support may see bears targeting the 11000.00 and 9750.00 psychological support areas subsequently.
The MACD indicator shows an extremely bearish outlook on the index and the possibility to trade lower is higher if the price fail to close above the 12200 previous support turned resistance.
However, a close above 12200 may see bulls attempting to reclaim the 13 000 and 15200. The outlook remains bearish in the near term as gains are capped by the Williams Alligator indicator. Critical areas to watch out for are the 13000 and 14000 resistance.
ActivTrader Sentiment Tool shows that 77% of the retail traders are currently bullish on the Nasdaq index. The falling US yields have given a boost to the equities market sentiment as Dollar strength remains underpinned by negative labour data and Manufacturing production dampening Fed policy tightening sentiment.
The Nasdaq index has a double bottom at 11700 and the possibility of trading towards the 13000.00 resistance can only be reinforced by breaching above the 12200.00 near-term barrier. The Bollinger band (20) baseline remains a critical pivot against upside gains. A failure to break above the 12200 may trigger selling pressure towards the 11700 near-term low. A failure to hold above that immediate support may renew bearish interests targeting the 11000.00 psychological support.
However, the Stochastic Oscillator reading is below 20.00 indicating an oversold outlook on the index and a possibility to see a rally to the upside in the near term.