NASDAQ Testing the 1W MA200. Is it on the brink of collapse?

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This is the Nasdaq index (NDX) on the 1W time-frame, where it hit the 1W MA200 (orange trend-line), for the first time since July 2010! Coupled with the 1W MACD just forming a Bearish Cross in the previous week, inevitably similarities emerge with the 2008 Housing Crisis.

And rightly so as until now, the 2022 correction has been very similar to October 2007 - July 2008. As you see after the index started falling initially, the price rebound at (or very close to in the case of 2022) the 1W MA200. The subsequent rebound, hit (or in the case of 2022 nearly hit) the 1W MA50 (blue trend-line), which in turn rejected the uptrend and turned the trend downwards again towards the 1W MA200.

It would appear that we are at this important level now where in July 2008 the 1W MA200 provided one last rebound before one final rejection on the 1W MA50 that on September 2008 broke below the 1W MA200 finally and caused a -42% collapse. Notice that the 1W Death Cross (MA50 crossing below the MA200), though a bearish pattern, it was formed right at the bottom of the Cear Cycle. Both then and now the 1W RSI was trading under Lower Highs, which when broke, signalled the start of the recovery and the new Bull Cycle. Also the 1W MACD took a Bearish - Bullish - Bearish Cross sequence before the -42% collapse.

What this chart shows is that the emphasis should be on the current test of the 1W MA200. A trend-line tested three times since February 2010 and provided extremely strong Bull Phases, with COVID crash (March 2020) being the most recent. A break below it, could initiate a 2008 type collapse, with a -40% from current levels placing the target around the COVID March 2020 Low (6650). On the other hand, it shows that the 1W MA50 is the current Resistance and if broken first (after it failed this August), it could invalidate the extension of the Bear Market and save the day for stocks.

What do you think will happen next?


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