Nasdaq 100 Technical: Potential bullish reversal at 50-day moving average

[Redator]

This is a follow-up analysis and update of our prior report, Nasdaq 100 Technical: Eyeing a new fresh all-time high, supported by momentum and flattening US Treasury yield curve, published on 7 August 2025.

The price actions of the US Nasdaq 100 CFD Index (a proxy of the Nasdaq 100 futures) have staged the expected bullish move, hit the first medium-term resistance level of 23,890, and printed a fresh all-time high of 23,986 on last Wednesday, 13 August.

Thereafter, it staged a decline of -4.2% over five trading sessions to record an intraday low of 22,970 on Wednesday, 20 August, due to overvaluation risk as the Nasdaq 100 has surged the most by 38% among the benchmark US stock indices since 7 April, ex-post US “Liberation Day” tariffs announcement.

In addition, the fear of an Artificial Intelligence (AI) bubble has resurfaced, where OpenAI CEO Sam Altman warned of an AI bubble last week, adding that some AI start-ups with “three people and an idea” have received funding at such high valuations.

Fundamental and technical signals suggest the Nasdaq 100’s major uptrend remains intact, with the latest pullback viewed as a minor correction rather than the start of a broader downtrend.

AI bubble fears overblown

Fig. 1: Nasdaq 100 12-month forward EPS growth & PE Ratio as of 20 Aug 2025 (Source: MacroMicro)

The 12-month forward earnings per share (EPS) growth of the Nasdaq 100 have only just started to improve in the past three months, after it dropped from 30.8% y/y recorded in May 2024 to 12.5% y/y in May 2025, before it rebounded to 14.6% y/y in August (see Fig. 1).

Even though the valuation of the Nasdaq 100, measured by the 12-month forward price-to-earnings (PE) ratio, has increased to 27.15 in August after the 38% rally ex-post US “Liberation Day, its forward PE ratio is still below the prior peak of 31 printed in January 2024.

Hence, with EPS growth improving and the PE ratio below the prior peak, the Nasdaq 100 still has “ammunition” to potentially scale higher highs.

Fig. 2: US Nasdaq 100 CFD Index minor trend as of 21 Aug 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

Bullish bias with key pivotal support at 22,960/22,945 with intermediate resistances at 23,420 and 23,660.

A clearance above 23,660 is likely to increase the odds of a potential fresh bullish impulsive up move sequence for the next resistance to come in at 23,930 (current all-time high area) in the first step (see Fig. 2).

Key elements

• The recent five days of decline have stalled at the 50-day moving average, the pull-back support of the former upper boundary of the long-term ascending channel from the March 2020 low, and the 76.4% Fibonacci retracement of the prior up move from the 1 August 2025 low to the 13 August 2025 high.
• The 22,960/22,945 is a key inflection zone of the US Nasdaq 100 CFD Index where a potential bullish reversal may occur.
• The hourly RSI momentum indicator has staged a bullish breakout above a former parallel descending resistance after it dropped to an oversold condition on Wednesday, 20 August. These observations suggest that the prior bearish momentum has started to ease.

Alternative trend bias (1 to 3 days)

The key near-term risk event will be the US Federal Reserve Chair Powell’s speech at the Jackson Hole Symposium on this Friday, 22 August, for hints on whether Powell will shift to the dovish camp from his current staunch “wait and see” approach on US monetary policy.

A break below the 22,945 key support invalidates the bullish tone and puts the medium-term uptrend phase in jeopardy to open the scope for an extension of the corrective decline to expose the next supports at 22,680 and 22,420.

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