In today’s technical view, we’re breaking down the NASDAQ, which posted a negative session on Tuesday, raising the question: was it just a dip, or the beginning of a broader reversal?
The session began inside a flag formation (marked with black lines), and an early breakout to the upside initially triggered a buy signal. However, that move was quickly invalidated. The breakout proved to be false, marked with green, as the index reversed sharply lower, giving back all gains and more.
To add pressure, the price broke below a red horizontal support zone, a key level that had held firm in recent sessions. That break reinforced the bearish tone, at least in the short term.
Since the drop, the NASDAQ has entered a corrective phase, forming a wedge pattern (marked with orange lines). This wedge is tightening, and the breakout from this formation will set the next directional play.
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A break above the upper orange wedge line, especially if it reclaims the red resistance zone, would reignite a buy signal and suggest the false breakout was just a shakeout.
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A break below the lower orange line would confirm continued bearish momentum, setting up for further downside.
We’re now at the edge of decision, and traders should watch this wedge closely — the next move could define the trend for the rest of the week.