False Breakout Raises Red Flags for NASDAQ’s Uptrend

In today’s technical analysis, let’s turn our focus to the NASDAQ, where recent movements hint at the possibility of a more significant correction. The index is showing some worrying signs, especially after a false breakout above a crucial orange resistance. This false breakout, highlighted in red, aligns with a bounce from the top of a long-standing channel-up formation, indicated by the upper green line. The failure to hold above these levels has brought the NASDAQ down to a crucial testing ground.

Currently, NASDAQ is perched on two critical supports: the lower line of the channel-up formation and a mid-term uptrend line marked in blue. As long as the index stays above these levels, traders have reason for optimism, with this zone presenting a potentially favorable place for buyers to step in. A sustained bounce here could suggest that the NASDAQ will hold its ground, maintaining its broader positive trajectory for now.

However, should the NASDAQ close a day below both support levels, it could signal a more pronounced shift. A break below these supports would offer a clear short-term signal to sell and could indicate the beginning of a broader bearish correction in the mid-term. The action around these two key levels will likely set the tone for the NASDAQ’s mid-term outlook, with a decisive move either reinforcing optimism or confirming a more substantial downturn ahead.

Source: https://www.axiory.com/analytics/technical-analysis/false-breakout-raises-red-flags-for-nasdaq-s-uptre