Is the Nasdaq’s rally running out of steam? Or is it merely going for a quick correction?
As you can see from the 4-hour chart below, the equity index is having some trouble busting through the $13,250 area.
This is right around the top of its rising wedge formation, so bulls might be booking profits right there. In that case, we might just see a pullback to these nearby support levels.
Nasdaq (NAS100) 4-hour Chart by TradingView
The Fibonacci retracement tool shows where more buyers might be looking to join in the rally.
Among these levels, the 38.2% Fib is looking like a good long entry point since it’s right around an area of interest or former resistance zone, as well as the 200 SMA dynamic support.
The faster-moving 100 SMA is above the 200 SMA to confirm that support levels are more likely to hold than to break.
Still, a deeper pullback could reach the 50% Fibonacci retracement level at $12,450 or the 61.8% Fib closer to the wedge support.
Now the latter might be the line in the sand for a bullish pullback, so a break below the $12,250 could signal that a selloff is in the works.
Do note that Stochastic is pointing up and looks ready to head north, so the index might follow suit as bullish momentum picks up.
In case we see another surge in risk-taking, the Nasdaq might even break above the wedge resistance and go for a rally that’s the same height as the chart pattern.
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