NASDAQ Moving Lower (1W)NASDAQ Weekly
Price Chart
After forming a double bottom in late 2022 the NASDAQ bounced and has melted up from its lows approximately 48% confirming that it was more than just a bear market rally. Most recently the NASDAQ has run into resistance (Light Red Box) and has descended roughly 3% past a minor trend line on the daily chart (not shown). Shorter term EMA's are beginning to even out (12-day / 26-day) indicting the beginning of a change in the direction of price action which will most likely move lower towards the target supports (Light Green Boxes). If the bottom support (Red Solid) is broken (pretty big "if" at the moment) then the possibility of breaking the long-term trend line (Yellow Solid) will come into play, however at this point it is premature to assume this comes to fruition.
Relative Strength Indicator
The major trend line (Yellow Solid) highlights the divergence from price action beginning in May 2022 and confirming the double bottom ending in December 2022. Most recently the RSI has remained elevated above the 70 line indicating a strong trend, however, the RSI has fallen back below the 70 signaling weakness. The RSI most likely moves down toward the major trend line and major support (Red Solid) from this point. Considering a cradle is in play with the resistance and trend line crossing, it will more than likely bounce with price action allowing the price to attempt one more move higher but will ultimately fail along with RSI failing to make a higher high and confirming price action. If the support and trend are broken it is most likely game over.
On Balance Volume
OBV bounced along with price and RSI in December 2022 and continued higher while making two consecutive bull flags confirming the movement. The OBV has failed to move higher after encountering resistance (Aquamarine Dotted) while retesting the major trend line (Yellow Solid) and seemingly has begun to move lower (emphasis on begun to). It is also notable to mention that a minor trend line (Yellow Dotted) has created a cradle that the OBV has so far failed to break. If the major resistance (Red Solid) is broken then it is basically game over, but we have two areas of support (Light Green Boxes) that will need to be broken first. The major resistance has had previous breaks which led to major downturns that can be seen in December 2000, February 2005, and September 2008 (all shown above).
TDLR;
Just want the meat and potatoes huh? Don't worry our entrees always Seem Legit. Price action recently hit resistance and has begun to move lower while EMA's begin to flatten. There's a 3% move down from a minor trend line on the 1D (not shown). The RSI is showing a bearish divergence after remaining elevated over the 70 line and beginning to move lower. The OBV looks to be forming a double top, and has run into resistance from a major and a minor trend line. Don't forget that this could take months to play out since this is the weekly chart.
What Seems Legit?
Possibly a bounce here from the support formed Jan - Mar 2022 in conjunction with the 12-day or 26-day EMA, retest the recent high, fail to break it and begin to move lower. It might just push lower due to the RSI on the 1D moving below the 50 line (analysis of the 1D has been posted).
"History doesnt repeat itself but often it rhymes" -
- Tap the 50-day EMA and carry on (2019)
- Crash to the major trend line and carry on (2020)
- Break the major support on the OBV and head lower (2000, 2005, 2008)
Chart Key
Yellow Solid = Major Trend Line
Red Solid = Major Support
Aquamarine Solid = Divergences
Red Box = Major Resistance
Green Boxes = Supports / Target Areas
