As the chart shows, the Nasdaq 100 index (US Tech 100 mini on FXOpen) has started the week on a positive note amid growing expectations that the longest government shutdown in US history may soon come to an end.
According to Reuters, a bill has been introduced in the Senate proposing amendments to extend government funding until 30 January. The news acted as a bullish catalyst for equity markets. Still, the question remains – is the risk truly behind us?
Technical Analysis of the Nasdaq 100
Analysing the hourly chart of the Nasdaq 100 (US Tech 100 mini on FXOpen) on 4 November, we:
→ Drew an ascending channel;
→ Noted signs of momentum exhaustion, as mentioned in our previous headline.
Since then, price action has evolved as follows:
→ The lower boundary of the channel provided support (1), prompting a brief rebound;
→ The 25,770 level acted as resistance (2) on two occasions, strengthening the bears’ confidence to push for a downside breakout — which ultimately succeeded.
The index’s subsequent movements have now more clearly outlined the formation of a descending channel (shown in red).
From the demand-side perspective:
→ After a false bearish breakout below 24,680 (showing characteristics of a Liquidity Grab pattern), the market staged an aggressive rally from point B;
→ Today’s session opened with a bullish gap, and the price has moved above the red median line.
From the supply-side perspective:
→ The 25,500 level, where sellers gained control during the previous channel breakout, may now act as resistance;
→ If the A→B move is viewed as an impulse, today’s rally appears to be a corrective rebound consistent with Fibonacci proportions — suggesting that downward momentum could resume within the red channel.
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