The Nasdaq 100 (NDX) recovered about +9% from its recent lows near 17,435 on Aug. 5 as of yesterday’s close, sending the index back to a key technical resistance threshold, and early trading in the /NQ futures contract is showing some modest gains for the tech sector. Consider a one-year chart of the NDX; much of the price action fits within an upward channel, with the lower level beginning at the 52-week lows on Oct. 26 and connecting the subsequent lows late April/early May and the parallel upper level extending across the highs. Price recently broke down through the lower level and hit the aforementioned lows, but yesterday retested this lower level of the channel as old support became new resistance. This trendline also lines up with the 63-day Exponential Moving Average, which comes in near 19,012, so this could be an important area to watch for a potential breakout to the upside.

There are a few bullish developments to note from a technical perspective. First, momentum is improving – albeit slightly. The Relative Strength Index (RSI) made a bullish crossover above its 50 midline yesterday, as well as made new relative highs along with price while also remaining above the oversold threshold of 30. The Moving Average Convergence Divergence (MACD) also made a bullish crossover on the same day. Price cleared the yearly Linear Regression Line (line of best fit based on closing prices) on Tuesday and remained above this level near 19,906 yesterday.

The NDX closed near the resistance confluence of the old trendline and the 63-EMA yesterday, so this will be a crucial spot to clear in today’s trading. If price keeps moving to the upside, look for further potential resistance near 19,475, as this represents a source of support and then subsequent resistance after price broke to the downside. Beyond that, look toward 19,736, as this area represents a pre-gap down low point that could be filled. To the downside, look for potential support near 18,700 once again based on repeated low points and subsequent high points.

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