Counter trend rebound hit the 15,140 resistance. A bearish reversal candlestick was observed at the close of yesterday’s US session, indicating that the recent two weeks of rally may not be the beginning of a new bullish move. The recent pull-back in the US 10-year Treasury yield is approaching its upward-sloping 20-day moving average, which is acting as support at around 4.55%. This may lead to a continuation of the medium-term uptrend in the Treasury yield. If the Treasury yield starts a bullish move, it could put downward pressure on the Nasdaq 100. In the past two weeks, the US Nas 100 Index has experienced a counter trend rebound from its swing low of 14,450 on September 28, 2023, reaching the 15,140 resistance. This bounce has been accompanied by a pull-back in the US Treasury 10-year yield, which has reached a key resistance level at 4.90% and has since declined to 4.62%. Several technical elements and intermarket analysis suggest that the US Nas 100 Index may be shaping a bearish reversal, especially with the upcoming release of key US CPI data. The pull-back in the US 10-year Treasury yield has almost reached its 20-day moving average, indicating potential support. The recent steep upward move in the Treasury yield has retraced towards the 20-day moving average, which is acting as support at around 4.55%. The daily RSI indicator has exited its overbought zone and remains above a key ascending support level, suggesting that the medium-term uptrend is still intact. This suggests that the pull-back in the Treasury yield may have ended and a potential new bullish move may be on the horizon. As the Treasury yield has been indirectly correlated with the Nasdaq 100, a further increase in the yield could lead to more bearish movement in the Nasdaq 100 in the short to medium-term. The recent positive move in the Nasdaq 100 has been supported by dovish comments from US Federal Reserve officials and positive news from China. However, yesterday’s price action formed a bearish reversal candlestick, indicating a potential change in sentiment from positive to negative. This suggests that market participants may not be confident in maintaining a bullish bias and profit-taking activities could occur, leading to further weakness in the Nasdaq 100 in the short-term. The price action of the Nasdaq 100 is approaching a medium-term descending trendline acting as resistance at 15,355, along with the 76.4% Fibonacci retracement level. If the key resistance at 15,355 is not surpassed, the Index may see a dip to the near-term support zone of 15,100/15,050 and a break below that could expose the next intermediate support at 14,920. On the other hand, a clearance above 15,355 would invalidate the bearish reversal scenario and indicate the next immediate resistance at 15,540.
