July 11, 2024 at 07:55PM
The NASDAQ index fell -408 points at one point in trading today. It is currently down -334 points or -1.80%. That is its worst trading decline since April 30 when the index fell -2.04%.
What did the decline do from a technical perspective?
The low price in the Nasdaq index today reached 18238.78. That was good enough to get the price below its 50-hour moving average at 18273.95 (black line on the chart above). However, the price was not able to get below the 38.2% retracement of the last trend move to the upside that started on June 24 low. That 38.2% retracement comes in at 18222.50.
If the price on a correction, cannot get below the 38.2% retracement of the last trend move, are the sellers winning? The answer is NO. The correction is just a normal, plain-vanilla variety in what is a bull market. The buyers are winning.
So going forward, to increase the bearish bias, watch that 38.2% retracement for clues for increased bearishness from a technical perspective in the Nasdaq index. Moving below increases the bearish bias, and traders would start to look toward the 50% midpoint of the same move higher at 18083.94. They would also target the rising 100-hour moving average (blue line on the chart above) which is currently at 18008 and moving higher toward the 50% midpoint
IF that 100-hour MA and the 50% can then be broken, it would further increase the bearish bias for the index.
By the way, the low price going back to July 1 stalled right at the 100-hour moving average before bouncing back to the upside. On June 24, the low price reached 17494 when the 100-hour moving average at 17441. Although 53 points from each other, it showed the buyers willingness to step-in ahead of that key moving average. That is what happens in a bullish market.
THE SUMMARY
With the 38.2% holding support today, the buyers have done their job. Those buyers bought against the 38.2% and have been able to halt/stall the efforts of the sellers. As a result, the buyers are keeping control and still winning.
The sellers? They failed on the first test and are still losing.
This article was written by Greg Michalowski at www.forexlive.com.
