Nasdaq 100: Breakout Signals Bullish Momentum

Binni Ong
01-04

Overview

  • The $NASDAQ 100(NDX)$ remains in a strong and well-established uptrend, reflecting continued bullish sentiment in the broader market.

  • Notably, the price has broken above the upper boundary of the equistance channel, signaling strength and the potential for further upside.

  • At the end of the first week of 2025, a bullish hammer candlestick pattern appeared, reinforcing the likelihood of continued bullish momentum.

What Is a Channel?

  • A channel is a technical pattern defined by two parallel lines that encapsulate price movements over a period.In an uptrend, the lower line acts as support where buyers typically step in, while the upper line serves as resistance where sellers might emerge.

  • When price trades consistently within the channel, it signals a structured trend. However, when price breaks above the upper boundary, as seen here, it often reflects increased buying strength and the potential for an accelerated move higher.

  • In this chart, the Nasdaq 100 traded within the channel for several years, respecting both the lower and upper boundaries, before recently breaking out.

What Is a Bullish Hammer Pattern?

  • A bullish hammer candlestick features a small real body near the top of the range and a long lower shadow.This pattern forms after a period of selling pressure, indicating that while sellers initially dominated, buyers regained control and drove the price higher by the close.

  • In the context of an uptrend, a hammer reinforces the strength of the prevailing trend and can suggest the end of a brief pullback or consolidation phase.

Applying the Channel and Hammer to the Nasdaq 100

  • The index was previously contained within a rising channel, with price generally oscillating between the lower and upper boundaries.

  • Recent trading shows the index moving decisively above the channel’s upper line—often viewed as a sign of strength in an uptrend.

  • The bullish hammer at the upper boundary underscores buyer support, suggesting momentum may continue higher rather than reversing downward.

Bullish Scenario

  • The Nasdaq 100 is in a strong uptrend, trading above the upper boundary of the channel with a bullish hammer pattern signaling continued upside momentum.

  • DLCs for short-term trading: A long DLC provides i

    nvestors bullish on the Nasdaq 100 to capture upward movement (e.g. $Nasdaq 7xLongSG260226(TQQW.SI)$ )

Bearish Scenario (If the Bullish Setup Fails)

  • If the breakout fails and the price reverses below the channel's upper boundary, it may signal a potential correction or downturn.

  • DLCs for short-term trading: A short DLC provides i

    nvestors bearishh on the Nasdaq 100 to capture downward movement (e.g. $Nasdaq 7xShortSG260324(NCTW.SI)$ )

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Have You Made Your First Trade?
People always hope for a good start, as it brings more confidence to face what comes next. In the stock market, there’s a saying that a strong January performance often signals a higher chance of market gains for the entire year. Conversely, if January ends in the red, there’s a higher likelihood of a down year overall. ---------------------- On the first trading day of the new year, do you think the market will close up or down? Will the market achieve the hoped-for positive start?
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