Hawkish FOMC Sends Markets Tumbling: NASDAQ at Key Bounce Zone

Yesterday’s FOMC meeting and Jerome Powell’s hawkish statement sent ripples across the financial markets, creating what can only be described as a water slide effect. Indices experienced sharp declines, while the dollar strengthened considerably. Today, however, we are seeing attempts at reversal. The dollar is showing a much stronger recovery, while indices remain in a precarious position, trying to stabilize.

Among the indices, the NASDAQ stands out as it tests a critical support area. Currently, it is bouncing off a significant horizontal support level and a long-term uptrend line. This confluence of support levels creates an excellent setup for a potential bullish reversal. The key question is whether this will result in a V-shaped recovery or if the index will carve out a double-bottom formation around this zone.

If the price manages to close the day above the orange resistance, it would signal a V-shaped recovery and indicate that the recent sell-off was merely a temporary setback. However, a failure to break this resistance could prolong the bearish correction, allowing a double-bottom pattern to form, which may act as a more extended base for a future rally.

On the flip side, a decisive close below the black uptrend line would represent a significant bearish signal, opening the door for a deeper correction. Yet, given the seasonality and the anticipation of the Santa rally, the likelihood of such a move appears limited at the moment. Traders will closely monitor these levels for clues on the next major trend direction.

Source: https://www.axiory.com/analytics/technical-analysis/hawkish-fomc-sends-markets-tumbling-nasdaq-at-key