We saw strong pullback on the US tech index in the second half of last week, and the downward movement continues after the weekend. The technical situation is starting to look very interesting here and could raise the risk of deepening declines. Of course, it is still far too early to think about a trend reversal, but the risk of a bigger correction exists. Fed and the monetary policy changes should be blamed as the reason for the recent pullback. The upcoming interest rate hikes in the United States are effectively stopping the upward move on the Nasdaq index (US100). Let's look at the technical situation on the daily chart.
Looking at the D1 interval, it may seem that there is no reason to panic yet. However, it should be noted that the index fell below the 100-period moving average, which acted as a key support in the past. Each drop in the area of the line marked in purple on the chart below, led to a rapid rebound and movement to new historical highs. However, this time, the rebound of the price from the EMA100 in December was not strong enough to provide new record highs. As a result, a local double top formation appeared on the chart, and this combined with the negation of support at 15,590 points (green geometry) may encourage the bears to be more active. The nearest important support should be considered near the level of 15,000 points, where the lower limit of the largest correction lies (blue rectangle). Should this level be breached, the next measurement is only the plunge from the beginning of 2020, which occurred in connection with the coronavirus fears (this range is marked in red).
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US100 D1 interval. Source: xStation5
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