NASDAQ Buyers Failed - Is a Bearish Trend Starting?

[00:00:00]In this video, we are going to take a look at Nasdaq, where price currently sits inside the broader move, and what I need to see before I become interested in either longs or shorts. Nasdaq produced a very strong bullish trend from the March low. Price continued making progress. The pullbacks remained relatively controlled, and the moving averages were clearly organized in the bullish direction. But over the last several weeks, the behavior of the market has changed. Price stopped making clean progress. The candles began overlapping, and Nasdaq entered a much more difficult period. There are now three possible scenarios developing on this chart. Before the end of the video, I'm going to explain exactly what I need to see in each scenario, and where I think Nasdaq is most likely to move next. Let's begin with the structure that formed after the bullish move. The movement into the June high was very strong. But once Nasdaq reached this area, the momentum began to slow down.

[00:00:55]Price started producing lower highs, while buyers continued defending the rising supports underneath the market.

[00:01:01]This created what appears to be a bullish pennant. Because this pattern formed after a strong bullish move, the expectation would normally be for buyers to eventually break above the upper boundary and continue the trend. But that did not happen. Buyers attempted to move higher several times, but they could not break properly above the highs. Instead, the market continued compressing until price eventually broke beneath the lower boundary of the pennant and moved below the 50 moving average. That is an important change.

[00:01:31]The bullish pennant has failed to produce bullish continuation, and sellers have now broken the first meaningful area of support. But I would not consider the bearish move confirmed yet. After breaking beneath the pennant and the 50 moving average, price reacted from the recent low, and is now moving back toward the moving averages. So, the market is currently testing the area it recently broke beneath. This is where where bearish scenario becomes interesting. For me to become interested in shorts, I want the current test of the moving averages to hold. I want to see buyers struggle to move price back above this area, followed by sellers returning with strong bearish momentum.

[00:02:10]The ideal sequence would be very simple.

[00:02:12]Price breaks beneath the pennant and the 50 moving average, returns to test the broken structure, fails underneath it, and then continues lower. But the quality of that continuation matters. I do not want to see one small bearish candle followed by immediate overlap. I want price to break beneath the recent low with clear bearish expansion. That means stronger bearish candles relative to the recent price action, limited overlap, and continued progress away from the moving averages. If sellers can do that, it would tell us that the previous bullish structure has genuinely failed and that the market may be beginning a new bearish trend. At that point, I would move to the lower time frames, evaluate the momentum, and wait for the next proper pullback before considering an entry. But if price moves slightly beneath the recent low and immediately returns above it, I would not be interested. That would suggest sellers still do not have enough control, and the market may simply return inside the range. Now, let's look at the bullish side. For buyers, reclaiming the moving averages would be a positive sign, but it would not be enough on its own. The market has already spent several weeks forming lower highs, and the original bullish pennant has already failed to break upward. So, buyers now need to prove that they can completely regain control of this structure. I want to see NASDAQ move back above the moving averages, return inside the previous pennant, and then break properly above the consolidation highs. That breakout also needs to happen with sustained bullish momentum. One candle moving above the highs, followed by an immediate rejection, would not confirm anything. I want price to break above the structure, remain above it, and then successfully hold the next pullback. That retest would be very important. If the previous resistance becomes support and buyers begin producing clean progress again, then the broader bullish trend may be ready to continue. At that point, I would begin preparing for possible longs. But until the highs are broken and the breakout holds, Nasdaq remains inside the same difficult structure.

[00:04:17]There is also a third possibility. Price may reclaim the moving averages and continue toward the highs, but then reject once again from the upper boundary. If that happens, the bullish breakout has still not occurred, while the recent bearish breakdown has also failed to produce continuation. That would suggest neither side has enough control to begin a new trend. In that case, I would simply expect the range to continue. Price could continue rotating between the recent lows and the consolidation highs until one side finally breaks out with enough momentum to hold outside the structure. This is why I would not be interested in trading somewhere in the middle. The middle of the range provides very little information. The important reactions will take place around the moving averages, the recent lows, and the upper boundary. So, my final outlook is this.

[00:05:10]I am currently slightly more inclined toward the bearish scenario because sellers have already broken beneath the pennant and the 50 moving average. But the breakdown has not produced enough follow-through yet. I do not want to predict the next move while price is testing such an important area. If the moving average test holds as resistance and bearish momentum returns, I begin preparing for shorts. If buyers regain the entire structure and hold above the highs, I begin preparing for longs. And if neither side can sustain the breakout, I simply expect the range to continue. That is the current situation on Nasdaq.