The Nasdaq is looking like a caged tiger that is ready to explode recently, as the leading US tech index continues to get veraciously scooped up on price dips below 13,000.
Last week the index bounced back with vigour and has already reached the 13,500 level after breaching past the notable resistance area of 13,380, which was a key short-term breakout point.
This week the technical are pointing to 14,000 and even higher. I strongly believe that the Nasdaq could easily trade well beyond the 14,000 and actually much closer to the 15,000 level.
One of the reasons that the Nasdaq has been rising so sharply is due to the fact that US rates may not be rising as aggressively. High momentum meme stocks in the Nasdaq thus come into favour.
Traders sentiment towards the Nasdaq is still slightly bullish. This is encouraging for the current recovery, as the retail crowd is not yet overheated on the bullish side, and largely absent from the rally.
I think we could see the Nasdaq bearish bias starting to continue towards the leading US Tech index over the coming days and weeks as traders disbelieve the current rally. This would accelerate the upside.
The Nasdaq index on the four-hour time frame has made a technically perfect invalidation of a large head and shoulders pattern.
If the index manages to hold above the 12800 level, then technical analysis is highlighting that the index could see a major recovery towards the 14,800-resistance area.
The Nasdaq index is currently bearish in the medium-term despite the recent price correction. A move above the 14,000 level is needed to change the overall price trend.
The possibility for movement to the upside is however high probability. Bulls may need to anchor the price above the 13,380 level in the near-term for the mega rally to continue.