Do NQ100_m bears have a chance as NFP looms?

• NQ100_m shaky ahead of Friday’s US NFP
• Momentum Oscillator reveals a negative divergence
• Prices could hit 3 possible targets if 14699.6 higher bottom is breached
• Bearish outlook invalidated if resistance at 15294.0 is broken

The NQ100_m index has been dominated by bulls since April, but bears may have a chance to take over the reigns as a lower top has formed at a strong weekly resistance level. Hawkish minutes from the Federal Reserve’s June policy meeting could support Nasdaq bears further, especially after it reinforced expectations around US rates staying higher for longer.

On the technical front, the NQ100_m created a higher bottom on 26 June at 14699.6 and a higher top on 16 June at 15300.5. Interestingly, the Momentum Oscillator also reveals a negative divergence between points “a” and “b” when comparing the tops at 14673.9 and 15300.5. This may alert technical traders that a momentum change could be on the cards.

Further confirmation was the market breaking through the 15 Simple Moving Average and the Momentum Oscillator starting to drop closer to the 100 baseline in a downward wave pattern.

If bears manage to break through the support level formed by the last higher bottom at 14699.6, then three possible price targets might be realized from there. Attaching the Fibonacci tool to the higher bottom at 14699.6 and dragging it to the lower top at 15294.0, the following targets can be determined:

• The first target can be estimated at 14332.3 (161.8%) if the price manages to break through a weekly support level at 14506.4.

• The second price target can be expected at 13737.9 (261.8%) which is on a next weekly support level at 13757.8

• The third and final target can be anticipated at 12776.1 (423.6%).

If the resistance level at 15294.0 is broken, the current scenario is no longer valid. 

As long as bears keep pulling the market downwards they have a chance to cause an early stage of a new downtrend on the NQ100_m D1 time frame.