Inverse Head and Shoulders on NASDAQ

The NASDAQ has been navigating a highly defensive market environment over the past two days, with sellers pushing for new lows. However, buyers have stepped in at key levels, preventing a deeper decline and shaping a notable V-shaped reversal. This rapid rebound, observed on both Tuesday and Wednesday, has played a crucial role in forming an inverse head and shoulders pattern, a classic trend reversal structure that typically signals a shift from a downtrend to an uptrend.

A critical element of this pattern is the neckline, represented by an orange resistance level. As long as the price remains below this threshold, the breakout remains unconfirmed. The ideal scenario for bulls would be a daily close above the neckline, which would validate the pattern and indicate a strong buying opportunity. In this case, the first upside target would be set at the 21,000 level, marked by the blue resistance.

However, the failure to break above the neckline could turn this promising setup into a missed opportunity. If buyers prove too weak to capitalize on this reversal structure and the price instead moves lower, the market could see a renewed bearish wave. A drop below recent lows would invalidate the pattern, signaling strong selling pressure and increasing the likelihood of further downside.

As NASDAQ approaches this decisive moment, the next few sessions will determine whether the inverse head and shoulders pattern leads to a sustained rally or fades into another bearish continuation. The battle between buyers and sellers is intensifying, making the breakout or breakdown from this formation a crucial signal for traders.

Source: https://www.axiory.com/analytics/technical-analysis/inverse-head-and-shoulders-on-nasdaq