The daily NAS100 (left) has a weak bias. It is trading in its bearish channel between the lower blue and red bands. Also, its underlying momentum is to the downside; its stochastic has dropped below 20. The longer it stays there, the greater the prospects for lower prices.
However, the hourly chart (right) is showing strength on the day. We urge caution as it reminds us of a bear market rally. The hourly pattern (blue parallel lines) looks like a flag until proven otherwise. This type of pattern is continuation in nature.
We are wary of the R1 pivot level, which overlaps with price resistance and the 76.4% Fibonacci level. This is a triple confluence of resistance, making it a formidable level for longs and compelling for shorts.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.