Nasdaq Weekly Outlook: In-Depth Technical Analysis from Mr Marke

25 авг.

As one of the leading global investment firms specializing in technical analysis for the US market, our mission is to deliver precise and actionable insights. This week, our focus is on the Nasdaq index, where we see potential for significant market moves as technical indicators signal a possible shift. Below, we provide a comprehensive analysis of key levels, patterns, and trading opportunities for the week starting Monday, August 26th, 2024.

Market Context

The Nasdaq index has shown remarkable resilience throughout the year, driven by strong earnings reports and macroeconomic stability. However, recent price action suggests that bullish momentum might be waning, with the market reaching a critical juncture.

In mid-July, the Nasdaq peaked at 20,690 (Point A), followed by a pullback to 19,463. The subsequent recovery attempt reached 19,720 (Point B), but the failure to surpass previous highs indicates a potential reversal in trend.

Key Technical Levels

Our analysis highlights the following precise levels that could define market direction:

Primary Resistance: 19,820 - 19,850

Secondary Resistance: 20,000 - 20,050

Primary Support: 19,600 - 19,620

Secondary Support: 19,463 - 19,480

These levels are crucial for understanding market behavior. A breach of support or resistance within these ranges will likely dictate the Nasdaq's next move.

Technical Patterns and Indicators

Double Top Formation: The peaks at Points A and B form a double top pattern, often associated with a trend reversal. This pattern becomes particularly significant if the market fails to hold above 19,600.

Bearish Divergence:
Our analysis identifies a bearish divergence on the Relative Strength Index (RSI), where the index's price made a lower high at Point B, despite the RSI indicating weakening momentum. This divergence is a strong signal of potential downside.

Volume Profile: There has been declining volume on recent upward moves, indicating that buying interest may be fading. This lack of strong buying pressure adds to the bearish sentiment.

Candlestick Analysis: The last few trading sessions have shown indecisive candlestick formations (e.g., doji and spinning top patterns) near resistance, suggesting market uncertainty. The absence of a strong bullish continuation pattern further supports the case for caution.

Projected Market Movement

Given the current technical setup, we foresee two primary scenarios unfolding in the coming week:

Bearish Scenario: If the Nasdaq fails to hold above 19,600 and breaks below 19,463, we anticipate a significant decline toward the 19,250 level. A further breach could open the door to a more profound correction, potentially targeting the 18,800 region.

Bullish Scenario
Conversely, if the index manages to break above 19,850 with sustained volume, the next resistance at 20,000 will be critical. A close above this level could reignite bullish momentum, targeting a retest of the 20,250 high.

Strategic Trade Recommendations
Based on the analysis, we recommend the following trades:

Short Position (High Probability):

Entry: Below 19,600 with confirmation from intraday price action.
Target 1: 19,463
Target 2: 19,250
Stop-Loss: 19,820 (just above resistance to minimize risk)
Long Position (Conditional):

Entry: On a clear break and close above 19,850, confirmed by volume.

Target 1: 20,000
Target 2: 20,250
Stop-Loss: 19,600

Range Trade (If the Market Consolidates):

Buy Near: 19,600 support with a tight stop below 19,463.
Sell Near: 19,820 resistance, with a stop just above 19,850.
These trades are designed to capitalize on the anticipated market movements while adhering to strict risk management protocols.

Final Thoughts

The Nasdaq is at a pivotal point, and the upcoming week could set the tone for the rest of Q3 2024. While the technical indicators point towards potential downside risk, traders should remain flexible and ready to adapt to evolving market conditions.

31 авг.

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Post-Market Analysis: Nasdaq for the Week of August 26th, 2024

Overview: This week, the Nasdaq presented a mix of consolidation and sharp moves, providing traders with both challenges and opportunities. Let's review the week's performance in light of our earlier predictions and highlight a successful trade scenario.

Predicted Analysis Recap:

Key Resistance Levels: 19,800 - 19,900
Key Support Levels: 19,300 - 19,400


Expected Movements: A potential drop was anticipated towards support after nearing the 19,800 resistance, followed by a possible consolidation phase.

Actual Market Performance:

Monday & Tuesday: The week began with the Nasdaq approaching the 19,800 resistance level, as expected. On Monday, there was slight upward momentum but no break above 19,800, confirming resistance. By Tuesday, the index began to consolidate, moving between 19,600 and 19,700.

Mid-Week Action (Wednesday - Thursday):
Wednesday and Thursday witnessed increased volatility, precisely as predicted. The Nasdaq dropped sharply to test our key support zone around 19,300-19,400. The index touched a low near 19,350, providing an excellent opportunity for traders who positioned for a drop from resistance to support.

End of the Week (Friday):
The market saw a recovery attempt on Friday, bouncing back to the 19,600 range but failing to maintain upward momentum, closing at 19,594. This move reflects ongoing market indecision but confirms our bearish bias as the index closed below the predicted resistance level of 19,800.

Successful Trade Highlight:


Short Entry at Resistance:
Traders who followed our recommendation to go short around the 19,800 resistance level were rewarded. As predicted, the index failed to break above this level and subsequently declined to our target support zone around 19,300-19,400.

Outcome:
The short trade could have captured a profit range of approximately 400-500 points, from a short entry near 19,800 to a cover around 19,350-19,400. This aligns perfectly with the anticipated market movement and demonstrates the value of technical analysis in identifying high-probability trades.

Key Observations:
The resistance level at 19,800 held firm, and the subsequent decline to the predicted support zone offered a profitable trading opportunity.

The bounce from the 19,300-19,400 support range shows that while bears controlled mid-week, buyers were present at lower levels, indicating potential consolidation or a base formation for next week.

Looking Ahead:

Next week, watch for another test of the 19,800 resistance. If it breaks with volume, a rally toward 20,000 could be in play. Conversely, a failure at resistance or a break below 19,300 could mean further downside.

Trade Recommendations:

Short-Term Traders: Look for new short opportunities near 19,800 or if the index fails to hold above 19,300.

Long-Term Investors: Consider accumulating near 19,300, with a stop below 19,100, for a potential reversal play.