THE Nasdaq 100 Index surged 25.9 per cent in 2024, driven by strong performances from major technology firms such as Nvidia and Alphabet. The uptrend continued into 2025, despite market volatility stemming from US President Donald Trump’s inauguration and policy expectations. The introduction of trade tariffs in early 2025 also added to market swings.
Beyond trade policies, interest rate expectations have influenced sector performance, particularly in rate-sensitive industries. Sticky inflation in the US has dampened hopes for aggressive rate cuts, with projections now expecting no more than one cut in 2025. Additionally, scrutiny over US technology valuations, amid artificial intelligence (AI) advancements and shifting capital flow to Chinese tech firms, has contributed to market shifts.
Bullish scenario
The Nasdaq has maintained its uptrend, with the 20-day and 50-day simple moving averages (SMA) acting as strong support since September 2024. The index recently breached the 22,040 resistance level, signalling continued bullish momentum. The next key resistance is at 22,135, which aligns with the Fibonacci 1.00 level and the high on Dec 16, 2024. If the index holds above the 22,135 level, further upside targets include 22,500 and 22,850. A sustained rally past these levels could extend the bullish trend.
Bearish scenario
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Despite recent gains, short-term technical indicators suggest a possible pullback. If the index fails to sustain levels above 22,135, it could face downward pressure. A break below this resistance may lead to a retracement towards the 21,500 support. Should selling pressure intensify, additional support lies at 21,200. A drop below this level could trigger deeper corrections, testing lower Fibonacci retracement levels. Market uncertainty after Trump’s policies and reduced liquidity during the recent Chinese New Year holiday could amplify volatility in the near term.
Conclusion
The Nasdaq 100 remains in an uptrend, with 22,135 as a critical resistance level. Holding above key SMA supports could pave the way for further gains towards 22,500 and 22,850. However, failure to break resistance may trigger a pullback to 21,500 or lower, especially amid ongoing macroeconomic uncertainties. Investors should closely watch technical levels and policy developments in the coming weeks.
The writer is manager, dealing & investor education, at PhillipCapital
