On the daily chart below for the Nasdaq, we can see that the price started to consolidate just below the key 12274 resistance. The moving averages are still crossed to the upside with the red long period moving average acting as support, although the convergence due to the rangebound price action might cause a cross to the downside.

After bouncing from the 61.8% Fibonacci retracement level and breaking out of the bullish flag, the rally began to get exhausted as more bearish news started to filter through. The buyers will need a very good catalyst now to break above the key resistance, otherwise the sellers may get back control and invalidate the bullish setup.

Nasdaq Technical Analysis

On the 4 hour chart below, we can see that the price has also broke below the trendline as it started to consolidate just below the key resistance. Although the moving averages have crossed to the downside, it’s always better to ignore them in a rangebound market as they can give false signals.

Every technical tool should be used in the right context and for the moving averages the right context is a trending market. The next key economic releases will be at the end of the week, so in the meantime the technicals should lead.

On the 1 hour chart below, we can see more closely the range defined by the support at 11920 and the resistance at 12220. So that’s roughly a 300 points range. Generally, the best thing to do is to sit out and wait for a breakout with a clear fundamental catalyst.

Another strategy traders can use is to “play the range” buying at support and selling at resistance. The playbook looks clear though: traders should wait for a breakout on either side and then go with the flow.