Nasdaq 100 Index price averages produce 'golden cross'

[MongiIG]

While the Nasdaq 100 price is correcting in the near term, the golden cross indication suggests that a longer term bull trend could still be emerging.

Source: Bloomberg

 

Indices Nasdaq-100 Nasdaq Moving average Price Technical analysis

 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Thursday 02 March 2023 

Nasdaq 100 – Golden Cross confirms

Source: IG

A daily chart of the Nasdaq 100 (US Tech 100) highlights that the 50-day simple moving average (50MA) (green line) has recently crossed above the 200-day simple moving average (200MA) (blue line). This moving average crossover is known as the ‘golden cross’, a suggestion that a new bull trend may be emerging.

Inversely, when the 50MA crosses below the 200MA the technical analysis term associated with the occurrence is referred to as the ‘death cross’. A death cross is a suggestion that a new long term bear trend may be emerging.
The chart above marks ‘death cross’ scenarios on the Nasdaq 100 with the black arrows and ‘golden cross’ scenarios with the blue arrows. The chart shows these occurrences since the beginning of 2019.

It should be noted that the ‘golden cross’ is considered a longer-term indication of trend. Short term traders might use this in determining a bias to trades on the index i.e. looking for opportunities for long entry rather than short entry, while the longer term trend is considered up (by these metrics).

Nasdaq 100 - Further technical indications

 

Source: IG

The start of 2023 has seen the price of the Nasdaq 100 breaking above long-term trend line resistance (red line), before a correction from the short-term highs ensued. The correction or pullback has now taken the price into oversold territory as noted by the stochastic indicator on our chart.

In line with the longer-term bull trend, suggested by the ‘golden cross’ and the trend line break, traders might consider looking for long entry should some bullish signals confirm in the near term to support.

A short-term bullish indication might be considered should we see the price produce a strong close above the black trend line on the chart above. Ideally this trend line break should be accompanied by a sharp move out of oversold territory by the stochastic indicator.
In this scenario, 12900 and 13190 become upside resistance targets from the move, while a close below the 11665-support level might be used as a stop loss indication for the trade setup should it confirm.

Nasdaq 100 – IG client sentiment

Source: IG

As of the 2nd of March 2023, 60% of IG clients with open positions on the Nasdaq 100 expect the price to rise over the near term, while 40% of IG clients with open positions expect the price to fall.