Thursday's Market Minute: Nasdaq Breaks Through Critical Technical Support

It’s shaping up to be a rough morning for Nasdaq 100 futures bulls, as the tech heavy index is plunging down through some key technical indicators. The tech-heavy index broke through an uptrend beginning at the start of 2023 during the middle of February and now has found itself falling through several moving averages in rapid succession, including the 21-day Exponential Moving Average and the 252-day EMA. This morning marks another potentially critical breakdown in the form of the confluence of the 200-day Simple Moving Average and the 63-EMA, which are aligned around 11,940. Remember, the longer-term the moving average, the more slowly it reacts to price change but the more significant it is when breached.

Another indicator showing a potential alarm is that price also fell below another support point in the Volume Profile Point of Control (the price level with heaviest trading), which sits around 12,105. Momentum is also trending lower, with the Relative Strength Index (RSI, which measures the speed of price changes) dipping below the midline and accelerating to the downside with price. The Moving Average Convergence Divergence indicator (also known as MACD, another momentum indicator) also shifted toward the bearish side recently.

Hope for the bulls lies at one of the last major moving averages still remaining to the downside; the 50-day SMA sits near 11,810. Below that, the 100-day SMA roughly coincides with some old highs and lows from January near about 11,630. Old support can tend to become new resistance, so the 200-day SMA & 63-EMA confluence is now the upside hurdle to overcome.