Introduction
The Nasdaq has seen a big drop recently, falling almost 3% last Friday on the back of Intel’s poor guidance, which led to a sell-off in tech stocks. There is also talk about whether the AI boom is sustainable and whether the bubble could be bursting. The Chinese stock market has been selling off with the China50 index down 22% from its recent high.
Now the index is sitting in a support zone and between the 50- and 200-day moving averages. Are bulls going to be able to hold it or will we see the US markets follow the Chinese market down?
NQ technical analysis
The support zone sits at around 28,778. It is a minor zone; however, it has only been tested a handful of times, but bulls will need to hold this level intact to stop a further drop to the 200 MA. That moving average is sitting at 28,079. It will be the last line of defense against the lower support zone at 27,200, which was the low made on the 31st of July.
This means there could be possible long entries, but it’s a risky market to be trading in right now.
Possible NQ trades
Long trade: Buy around the current zone with stops placed below 28,245, but another long could be taken just below that at the 200-day MA. A candlestick reversal on the daily chart or even a reversal on a shorter time frame like the hourly could be the answer moving forward for the bulls.
Short trade: Shorts can be taken if you are on the side of the bears that believe the AI bubble is bursting and that the Chinese stock market is going to drag down the US market with it. Stops can be placed above last Friday’s high around 29,200.
Disclaimer: Educational content only; no personalized investment or trading recommendation is intended. Futures carry substantial loss risk and may be unsuitable for some traders. Examples are hypothetical and do not predict results. Stop orders cannot guarantee an execution price. Evaluation requirements and payout terms vary and may change; consult the provider’s current rules.
