Nasdaq To Extend Its Bounce?

Share On Facebook
share on Linkedin

Among the large US indices, the Nasdaq 100 has fallen the furthest from its highs. However, we’re starting to see signs that the tech benchmark could be oversold.

We can see on the weekly chart that, having fallen over 15% from its highs, the Nasdaq is now within its second worst drawdown since the Nasdaq bubble burst. Interestingly, the prior two times it has falled 15% or more post-bubble, the index has posted a solid recovery. Whilst this may not provide a solid buy signal within its own right, it does provide food for thought and send a warning to bears, especially given the clues on the daily chart.

Switching to the daily chart shows the index remains within a downtrend with its series of lower highs and lows. However, a bullish divergence with RSI warns that downside momentum is waning, and prices have since returned above the lower Keltner band to show mean reversion is now underway.

Since falling from the 7700.6 high there have been three occasions where it has bounced back above its lower Keltner. And whilst the current move from 6442.4 has recovered by 3.8% already, it’s worth noting that the prior two rebounds above the lower Keltner retraced around 6.1% and 9.6% from their lows. Considering the choppy nature of the bearish trend structure, a rebound of similar magnitude is not impossible. Using the 6.1% and 9.8% retracements as a hypothetical guide we could see the Nasdaq rebound towards 6835.4 (near the 20-day average) or 7060.9.

This could provide bullish opportunities for counter-trend traders or serve as levels to seek signs of price exhaustion with a view to short the index later, in line with dominant momentum.


Faraday Research offers real time FX and Equity trade signals from qualified analysts. Click here to try us free.


CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

Do you want to write for our Newspaper? Get in touch:

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20220816 01:27:44