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Indices are falling. Is this the beginning of something bigger?

In today's analysis, we will look at two of the most prominent world indices that determine the trend, namely the S&P500 and NASDAQ.

In recent days, both of these indices had gone into correction while violating their structure. The question at hand remains, is this just a temporary correction or should we be worried?


As for the S&P500, we fell through a long-term trend line that was kept intact for several months. However, if you go through my recent analyzes, you will find that I assumed that something similar would happen. And then the price went down right through the trend line.

The key zone is currently at $ 4486 - $ 4516 . Why is this zone important? Because in order to even think in the terms of a bullish market, we need to overcome it. Unless we get out of here, we can forget about growth as we are still in a correction. Truth to be told, the chart was indeed trying to get back up after the slump but all efforts were promptly stopped by the mentioned key zone.

At the moment, I see but two scenarios. Both of them being more or less bearish. The first scenario is a triangle. This means that the S&P500 would now form a triangle and then probably would still fall to somewhere around 4269 points.

SP500 on 4H chart Figure 1: S&P500 on a 4H chart with visible key zone


With NASDAQ, it is similar here. It also fell through the long-term trend. However, the NASDAQ has waited with its slump for a bit longer. If we were to look at individual stocks in the whole sector, we would find that the technological stocks went into correction a bit later on. This is exactly what can be seen in this chart.

Here, it is absolutely crucial for us to overcome the level of 196 points. Only after that, can we think of continuing the bull market. However, as long as we are below this level and in the channel, there is a high probability that the price will come closer to the level of 184 - 186 points.

NASDAQ on 4H chart Figure 2: NASDAQ on a 4H chart


As charts have shown us, the growth rate has clearly run out of power and we are starting to decline. At the moment, however, it is impossible to say whether this decline can be ascribed only to the normal correction or whether it will be something more serious. However, the Fed is actively responding to change and up to this point, it has always saved the market. I assume that the correction will continue, but as soon as a bigger threat appears on the horizon, the Fed will intervene and release more liquidity into the market, which will pull it back up.

Jakub is a crypto trader and founder of Trader 2.0 project, which helps hundreds of traders from central Europe to understand cryptocurrency trading and its challenges. Jakub not o...


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