The tech-heavy Nasdaq has experienced extreme volatility this week. After a brutal multi-day selloff that plunged the index down to 23,500, officially dropping more than 10% from its recent highs into correction territory, buyers stepped in aggressively. Thursday saw a massive swing, pushing the index back up to close above the 24,000 handle.
Was this 10% plunge a false signal and a massive bear trap, or just a dead cat bounce before we head lower? We break down the crucial "Three-Day Rule" for confirming breakdowns and map out the key levels to watch as we head into a major holiday weekend.
Key topics covered
- Geopolitical relief rally: What sparked Thursday's massive reversal? We discuss the slight easing of geopolitical tensions, including rising hopes that commercial traffic may soon be allowed through the Strait of Hormuz after Iran announced it is drafting a maritime transit protocol with Oman.
- "Three-Day rule" & false breakdown: We look closely at the official 10% correction threshold near 23,650. While the Nasdaq traded below this level, it only managed two daily closes below it, failing to meet the three consecutive closes typically required to technically confirm a structural breakdown. This suggests the recent dip might be a false break.
- Holiday Liquidity Warning: With London and European markets closed for the Easter holidays (Good Friday and Easter Monday), institutional volume and liquidity will be exceptionally low. We explain why traders need to stay defensive through Friday's NFP data release and wait for the true market reaction when full volume returns on Tuesday.
- Double Top neckline: We analyse the daily chart's massive double top pattern. The battleground is the support zone between the 23,800 neckline and the 23,650 correction limit.
Nasdaq 100 scenarios & trade plan:
- Bullish (Bear Trap recovery): If this bounce gains traction when institutions return on Tuesday, it completely invalidates the double top and the "official" correction. The immediate upside target is the short-term peak at 24,200. A break above that clears the path to the massive liquidity pool resting at the recent highs near 24,810.
- Bearish (cconfirmed breakdown): If Tuesday brings renewed selling pressure and we officially break and hold below the 23,650 level (confirming the breakdown), the floor opens up. The first major structural support sits at 22,800, followed by 22,650. However, if the double top measured move plays out fully, the downside target points to a much deeper drop toward 21,390.
Are you buying the dip or preparing for the measured move down to 21,390? Share your thoughts in the comments.
This content is not directed to residents of the EU or UK. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice.
ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Was this 10% plunge a false signal and a massive bear trap, or just a dead cat bounce before we head lower? We break down the crucial "Three-Day Rule" for confirming breakdowns and map out the key levels to watch as we head into a major holiday weekend.
Key topics covered
- Geopolitical relief rally: What sparked Thursday's massive reversal? We discuss the slight easing of geopolitical tensions, including rising hopes that commercial traffic may soon be allowed through the Strait of Hormuz after Iran announced it is drafting a maritime transit protocol with Oman.
- "Three-Day rule" & false breakdown: We look closely at the official 10% correction threshold near 23,650. While the Nasdaq traded below this level, it only managed two daily closes below it, failing to meet the three consecutive closes typically required to technically confirm a structural breakdown. This suggests the recent dip might be a false break.
- Holiday Liquidity Warning: With London and European markets closed for the Easter holidays (Good Friday and Easter Monday), institutional volume and liquidity will be exceptionally low. We explain why traders need to stay defensive through Friday's NFP data release and wait for the true market reaction when full volume returns on Tuesday.
- Double Top neckline: We analyse the daily chart's massive double top pattern. The battleground is the support zone between the 23,800 neckline and the 23,650 correction limit.
Nasdaq 100 scenarios & trade plan:
- Bullish (Bear Trap recovery): If this bounce gains traction when institutions return on Tuesday, it completely invalidates the double top and the "official" correction. The immediate upside target is the short-term peak at 24,200. A break above that clears the path to the massive liquidity pool resting at the recent highs near 24,810.
- Bearish (cconfirmed breakdown): If Tuesday brings renewed selling pressure and we officially break and hold below the 23,650 level (confirming the breakdown), the floor opens up. The first major structural support sits at 22,800, followed by 22,650. However, if the double top measured move plays out fully, the downside target points to a much deeper drop toward 21,390.
Are you buying the dip or preparing for the measured move down to 21,390? Share your thoughts in the comments.
This content is not directed to residents of the EU or UK. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice.
ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.