NAS100 potential short set up from key resistance level Analysis and trade idea:
The NAS100 (US 100 Cash CFD) is currently exhibiting significant bearish pressure after a notable uptrend that faced resistance around the 21,000-21,100 level. This area aligns with a strong supply zone where multiple rejections have occurred, suggesting sellers are actively defending this region.
Technical Breakdown:
• 4-Hour Chart Analysis: The NAS100 made a lower high after failing to break above the 21,100 resistance. The price action has since shown signs of exhaustion, forming a double-top pattern which indicates a potential reversal.
• Key Levels:
• Immediate Resistance: 21,100 - 21,150 zone. The price has repeatedly failed to close above this level, confirming it as a key resistance.
• Current Price: 20,551.8 (Bid price), which aligns with the middle of a consolidation range and just below a key pivot level.
• Support Zones:
• Initial support around 20,300-20,400.
• Stronger demand zone is identified between 20,000 and 19,900, which previously acted as a major support floor.
• Price Action & Fibonacci Confluence: The rejection from the resistance zone coincides with the 61.8% Fibonacci retracement level from the recent swing high to low, indicating a potential pullback. Additionally, price is testing a blue liquidity zone, suggesting a possible fakeout before a deeper correction.
Trade Plan:
• Entry: Looking for short entries around the 20,550 - 20,650 area after a bearish confirmation (e.g., a rejection candle or a break below 20,550).
• Stop Loss: Placing a stop loss above the recent high at 21,200 to avoid getting caught in any false breakouts.
• Take Profit:
• First Target: 20,300 level where price may find initial support.
• Second Target: 19,900 area, which aligns with a significant demand zone and could provide a more extended downside move.
Risk Management:
The trade setup offers a favorable risk-to-reward ratio, aiming for at least a 2:1 reward-to-risk. By using dynamic trailing stops once the first target is hit, we can lock in profits while allowing the trade to capture a larger move if the bearish momentum persists.
Summary:
Given the current bearish setup, NAS100 presents an opportunity to short from key resistance zones with well-defined stop losses above the recent highs. The technical confluence of supply zones, Fibonacci levels, and price action signals increase the probability of a downside move. Traders should remain vigilant for any reversal signs, especially if NAS100 breaks above the 21,150 mark, which could invalidate this setup.
