Nasdaq Selloff or Buying Opportunity ?

Jun 7

Hello traders, hope you're all having a relaxing weekend.

In today's analysis, we'll be taking a closer look at US100, which has recently experienced a sharp selloff and is now approaching a critical support zone that could determine the direction of the next major move. We'll discuss the key support and resistance levels, the significance of the current market structure, potential bullish and bearish scenarios, and the targets that may come into play depending on how price reacts around this area. With sellers showing increasing momentum and buyers being tested at a major technical level, this is one of those locations where patience and confirmation could be more important than prediction. Let's dive into the chart and see what the market may be telling us.

US100 is currently approaching one of the most important technical levels on the chart after experiencing a sharp and aggressive selloff from recent highs.

For several weeks, the index respected a well-defined rising structure characterized by higher highs and higher lows. Buyers consistently stepped in at key support areas, allowing price to maintain its bullish trajectory despite periodic pullbacks. However, the recent rejection from the rising resistance trendline has changed the short-term landscape and introduced the possibility of a deeper corrective phase.

What stands out most is the strength of the latest bearish impulse. In just a few candles, sellers erased a significant portion of the previous advance and pushed price directly into a major support cluster. Such momentum-driven declines often indicate increasing selling pressure and can serve as an early warning sign that market participants are becoming more defensive.

The support area highlighted on the chart is particularly significant because it represents a confluence of multiple technical factors:

• Previous reaction support that has attracted buyers in the past
• Rising trendline support that has helped sustain the broader uptrend
• Proximity to the 200 EMA, a widely followed dynamic support level
• A historically important zone where demand has repeatedly entered the market

When multiple technical factors align within the same area, that region tends to attract increased market attention. This is why the current support level has become the primary battleground between buyers and sellers.

Bullish Scenario-:
As long as price continues to hold above this support region, the broader bullish structure remains intact.

A successful defense of support would suggest that the recent decline was simply a corrective move within the existing uptrend rather than the beginning of a larger bearish phase. In that case, traders may look for signs of renewed buying pressure, such as strong bullish candles, higher lows, or a decisive shift in momentum.

Should buyers regain control, the immediate resistance marked on the chart becomes the first logical upside objective. A recovery toward that level would not only represent a relief rally but could also provide important clues about whether the broader uptrend is capable of resuming.

Bearish Scenario-:
The bearish case becomes increasingly attractive if sellers manage to secure a decisive breakdown below the highlighted support area.

A breakdown would represent a loss of both horizontal support and trendline support, potentially triggering further selling pressure as market participants reassess the strength of the recent uptrend.

In this scenario, the next significant area of interest lies within the demand zone below. The projected move from the current support level to that demand zone represents approximately 4.8% downside potential.

To better manage expectations and identify intermediate objectives, the midpoint of this projected decline has been designated as Target 1, while the demand zone itself serves as the final bearish target.

Key Levels to Watch-:

🟢Bullish Case
* Support holds
* Buyers step back into the market
* Immediate resistance becomes the primary upside target

🔴Bearish Case
* Support breaks decisively
* Target 1: Midpoint of the projected decline
* Final Target: Demand zone
* Total downside potential: Approximately 4.8%

Final Thoughts-:
Markets often reveal their intentions at important decision points, and US100 appears to be approaching one right now.

The current support area represents the line separating a potential relief rally from a deeper correction. While the recent selloff has undoubtedly shifted short-term momentum in favor of sellers, the broader structure has not yet been invalidated.

For now, the focus should remain on price action around support rather than predicting the next move in advance. Whether buyers successfully defend this level or sellers force a breakdown is likely to determine the next meaningful swing in the index.

The reaction from this zone could shape the direction of US100 for the coming sessions and potentially provide valuable insight into the strength of the broader trend moving forward.

Regards, Amit.

Jun 8

Trade active

Nice gains from support, trade position up more than 450 points now. Stop moving on the cost price now.

Jun 9

Trade closed: target reached

The immediate resistance, which was shared as the first target following the bounce from immediate support, has now been achieved, friends.

This chart is a great reminder that when we identify the right levels, price action can often work even better than expected. On the shared timeframe, price did not manage to close a single candle above the resistance, giving both short sellers and bounce traders ample opportunity to act.

I closed this trade with a profit of more than 700 points. Thank you all very much for reading, supporting, and following along. Wishing you the very best in your own trading journey.