Nasdaq 100 expected to soften as WTI, EUR/USD rally
Nasdaq 100 expected to soften as WTI, EUR/USD rally amid heightened geopolitical tensions.
Nasdaq 100 comes further off its June high
The Nasdaq 100 comes further off its its 4 1/2 month high at 22,041 amid escalating tensions in the Middle East.
As stated in the previous couple of weeks, negative divergence on the daily Relative Strength Index (RSI) forewarned investors of the current consolidation phase which has taken the index to Friday's 21,553 low.
Support below this level can be seen around the 5 June low at 21,473. Further down lies the 19 May low at 21,139.
Immediate resistance sits at Friday's 21,903 high and at last week's 21,979 high ahead of the 11 June peak at 22,041.
EUR/USD bounces off support
EUR/USD recovers from last week's $1.1447 low and has Friday's $1.1544 in its sights amid heightened tensions in the Middle East.
Further up lie the $1.1573 April peak and the 12 June high at $1.1632 which, together with the August 2021 low at $1.1664 offer strong resistance.
Below last week's low at $1.1447 the February-to-June uptrend line can be seen at $1.1434 ahead of the late May high at $1.1419. This area should thus offer support, if revisited. Were this support zone not to hold, the 6 June low at $1.1372 could be reached as well.
WTI rallies post US attack on Iran
WTI spike higher towards its mid-June $77.57 per barrel high following US strikes on Iran over the weekend. A rise above this level would likely put the August 2024 to January 2025 highs at $80.13-to-$80.73 on the map.
In case of the Strait of Hormuz being closed by Iran - through which about 20% of the world’s oil and over 25-30% of seaborne natural gas flows, a move above the $80.13-to-$80.73 resistance area might occur. In this case the July 2024 peak at $84.49 may be reached as well. This would represent another 12-13% rise in the oil price from current elevated levels.
Minor support is seen around Friday's $74.26 high and along the breached 2022-to-2025 downtrend line, now because of inverse polarity a support line, at $73.26. Further potential support sits between Friday's $72.36 low and the April peak at $72.22.
In case of de-escalation in the Middle East, the oil price may give back some of its recent sharp gains and could slide back towards the 200-day simple moving average (SMA) at $68.62.
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