Nasdaq 100 Tests Key Support After Midterm Tech Selloff

By Daniel Okafor

The Nasdaq 100 broke below its July swing low on Thursday as midterm-driven technology selling increased volume, according to Capitalcom.

That break extended a sequence of lower highs that began after the index reached its October peak. Capitalcom's TradingView analysis, filed under US Tech 100 and CAPITALCOM:NAS100, treats the move as a test of whether the decline has further to run.

What broke in the Nasdaq 100?

Before Thursday's sell-off, Capitalcom said the Nasdaq 100 had already weakened. The index lost an intermediate swing level, then broke below a rising 200-day simple moving average. Thursday's decline pushed it through the July swing low, which Capitalcom called a more significant break in daily market structure.

Capitalcom also noted that volume rose throughout the decline from the October highs. Its analysis read that increase as evidence of growing participation in the move lower, adding weight to the deterioration in price structure.

The 200-day simple moving average was still rising, however. Capitalcom said that made it too early to declare the longer-term uptrend over, even after the break beneath July support.

What does the first retest show?

The index is now attempting its first recovery and retest of broken daily support. Capitalcom framed the immediate test this way: “the question now is whether the breakdown can hold as the market attempts its first recovery, making the response around former daily support particularly important.”

The four-hour chart still shows the sequence of lower highs intact. Its 9-period and 21-period exponential moving averages are declining. Capitalcom said Friday's recovery interrupted the decline but had not yet changed the underlying structure.

Price is testing the underside of former daily support. Capitalcom wants to see whether buyers can regain lost ground or whether the former support area attracts fresh selling. Its analysis called the reaction particularly important because it will show whether the first retest repairs or confirms the breakdown.

What would confirm a bearish reversal?

If the recovery stalls below former support and the four-hour chart produces another lower high, Capitalcom said the bearish interpretation would gain weight. The recent lows would become the next structural reference for traders.

A sustained move back above broken support would weaken that case. Capitalcom said the recovery would need to regain the short-term exponential moving averages and break the sequence of lower highs, rather than deliver only a sharp bounce.

Capitalcom's larger conclusion was conditional: “a sustained reclaim of former support would raise the possibility that last week's move was a temporary shakeout rather than the beginning of a more persistent reversal.”

How much weight should traders give a rebound?

Capitalcom said a sharp rebound would not be unusual after a sell-off of this magnitude. It said the recovery's size matters less than whether the move begins to repair structural damage across the daily and four-hour charts.

A failed recovery would keep the recent lows in focus. A sustained reclaim of former support would support the temporary-shakeout interpretation. For now, Capitalcom sees no confirmed trend reversal, but it also has not ruled one out.

What should traders watch next?

Over the next few trading days, Capitalcom will focus on the response around broken daily support. The four-hour structure must begin to change for a stronger recovery case. A stalled retest and another lower high would reinforce the bearish setup.

The test also includes a recovery through the declining 9-period and 21-period exponential moving averages. Capitalcom said those technical repairs would matter more than the headline size of any bounce.

Friday's recovery only interrupted the decline, in Capitalcom's reading. The coming sessions will show whether buyers can establish themselves above the broken July low or whether the former support area begins to attract fresh selling.

What are the trading risks?

Capitalcom's analysis carries a separate trading warning. The firm said 89% of retail investor accounts lose money when trading spread bets and contracts for differences with the provider.

Capitalcom described both instruments as complex and leveraged. It said they can produce rapid losses and advised investors to confirm that they understand how they work and can afford the risk.

Capitalcom said the analysis is for information and learning only. It does not constitute investment advice and does not consider any investor's financial circumstances or objectives. The company also warned that past performance does not reliably indicate future results and said social media channels are not relevant for UK residents.

Capitalcom's next-session test is straightforward: buyers must hold above broken support and repair the four-hour structure before last week's decline can be treated as a shakeout.