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Charts of the day: is Nasdaq reaching a bottom?


Rising rates, a slowdown in China’s growth, and the ongoing Ukraine war sent risk assets on the fringe, with the tech-heavy US Nasdaq approaching a one-year low, or a 20% drop year-to-date.

Mixed US big tech earnings reflect businesses undergoing tough times with the unfolding economic uncertainty. At the same time, there are signs of dip-buyers emerging into beaten-up stock markets to seek bargains in the undervalued equities, making a technical view of the potential rebounding of Nasdaq.

Apple is to report earnings after the US markets close tomorrow (Sydney time), which will be a key mover of the broader markets.

NDAQ 100 - Daily (potential bottom reversal in play)

(Click to see the enlarged chart)

The Nasdaq reaches the pivotal support of the one-year lows at near 13,000 (the low seen on 13 May 2021), where the index rebounded on 24 February (Russia invaded Ukraine), and 15 March (Fed increased interest rate for the first time in two years). So far in 2022, the index rebounded three times that established on the 28 January (Fed meeting), 24 February, and 15 March, after a drop of 17%, 15%, and 16% respectively. Three times of rebounding were all seen a significant increasing volume, anticipating a potential third rebounding opportunity at the same support of near 13,000.

Key technical elements:

  • A potential rebounding at the pivotal support of near 13,000, but the downtrend is still intact.
  • Stochastic falls into the oversold territory, suggesting the bearish momentum is fading off.
  • MACD gives no clear sign of a reversal, indicating it may take more time to confirm a bottom when a golden cross is formed.

Key price levels:

Supports: 12,812, 12312 (the low of March 2021), 14,340 (Fib 38.20%)

Resistances: 13,690, 14,000 (20-day and 50-day moving average)

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