We can say in all certainty that the first few days of 2022 for the tech-heavy NASDAQ have been terrible. The NASDAQ closed 2021 near all-time-highs, and 2022 so far is a year of disappointment. Sure, maybe those words are too strong, but I’m sure that people going long would agree.
Post pandemic trading on stocks and indices can be pretty much summed up by one phrase: Buy the dip. So, when over those several months we had a correction, traders were eagerly anticipating the local dip to buy with a vengeance. That created a lot of V-shaped reversals on the chart and, frankly speaking, was a bulletproof approach for months. Will that be the case now too?
The NASDAQ is currently flirting with critical long-term support. This support is created by combining two important lines: a horizontal and a dynamic one. First, the dynamic one – it’s an uptrend line, which connects crucial higher lows since June 2020 (blue). The horizontal one is around 15600 points (orange), which has already proven to be a great help throughout December.
Buyers must buy the dip here and defend this area (green). If we see a breakout, that would mean a long-term sell signal and potentially massive trouble for the tech index. The next few days should be interesting.
