Looking at the daily chart of the Nasdaq 100 index we observe that the market is consolidating near its highs for just a little bit more than 2 months after a huge rise from October. The upward move in Nasdaq was about 650 points. After such a big and steep rise it is natural for the market to pause the up trend and take a breather before bulls re-energize and start a new up trend. The current price action of overlapping price movements that managed to retrace the 38% of the entire rise is most probably corrective and once it ends I will be expecting a new upward move to start and to take us towards 4600 or even 4900.
Nasdaq is now above the Ichimoku cloud and after testing more than 3 times the important support of the 38% retracement, it is testing the downward sloping trend line that connects the previous highs. Breaking and closing above this blue trend line resistance will increase the chances that we have already started the new upward move I am expecting. Resistance at 4292 is also important because if we break above it then we will have started a new pattern of higher highs and higher lows, which is another bullish signal.
Concluding, I’m bullish Nasdaq as long as it holds above the 38% retracement and I feel that a break out above this 2 month consolidation will be a great buy signal with 4600-4900 as a target area.