nasdaq
The Nasdaq 100 has opened steeply lower, continuing from yesterday’s lower close, as the technology index continues to endure a major correction following the completion of the measured move from the triangle breakout on the daily chart.
The latest round of selling, provoked technically by the bearish engulfing pattern of 15/16 February, comes as tech stocks endure a selloff lead by Tesla shares. Tesla is down 12.61% as of the time of writing, taking a hit from the selloff in Bitcoin to which its balance sheet is now exposed. Tesla CEO Elon Musk had mused in a tweet over the weekend that Bitcoin prices “seem high”; a comment that many have cited as triggering Monday’s correction.
Investors are also waiting for the testimony by Fed Chair Jerome Powell, as he provides an unscripted outlook into the US economy as he takes questions from US Congressmen. Traders would be watching out for his comments on the inflation expectations, and whether the Fed would act on the rising real bond yields.
The breakdown of the channel is complete, as yesterday’s closing penetration below the channel met the 3% penetration rule.
Today’s 2.02% decline (as of the time of writing) takes the Nasdaq 100 towards the 12973.9 support level, putting this downside barrier at risk.
A breakdown of this level brings 12769.3 into the picture (17 December 2020 high; 1 February 2021 low) as the immediate downside target. Below this level, the 21 December/6 January lows at 12489.7 become an additional target, as does the 12163.4 support level.
On the other hand, a failure of bears to breakdown the major support at 12769.3 or 12489.7 could allow for a recovery bounce, targeting resistance areas above the point of fresh demand. This allows 13135.5 and 13344.2 to come into the picture as potential targets to the north.
