Nasdaq 100 sits at a cross point both from a fundamental and a technical perspective. On the one hand, the news that the POTUS has COVID-19 sends uncertainty to financial markets. Typically, whenever that happens, the USD gets stronger, and the stock market weaker. On the other hand, Nasdaq 100 struggled to bounce meaningfully from a confluence area given by both dynamic and horizontal support.
Both bulls and bears have a shot at this point, but the balance seems to incline towards the downside. One wild card remains in front of us – the September NFP data.
The NFP release is scheduled in less than two hours from now. The consensus is that the United States added another 900k jobs in September and that the unemployment rate will drop to 8.2% from 8.4%.
As always, the NFP has the power to shift the market sentiment. Only this Friday the unknown is so big that the NFP may come in second place in terms of importance.
In any case, look for revisions to the previous data when interpreting the current NFP. Also, traders may have the interest to see if the trend of permanent job losses reversed from the previous months.
The chart below shows multiple bearish patterns, and only one possible bullish condition. On the bearish side, the hesitation at the current levels points to a head and shoulders pattern having a measured move much lower than the current market price. On the bullish side, the fact that the index still holds at the confluence area gives hopes to bulls.
To trade it, one needs to use pending orders. Bulls may want to buy a move above 11,600 with 11,000 stop loss and targeting a new all-time higher. On the other hand, bears may want to wait for a break below 10,800 before selling for the measured move. In this case, the invalidation sits at 11,500.
