On both Tuesday and Wednesday, the NASDAQ index stalled right against the 200-hour moving average. That moving average also aligned closely with a downward-sloping trendline, which defines the upper boundary of a trading channel.
The index has been trading within this channel since February 5, with multiple tests of both the upper resistance zone and the lower boundary.
The failure to break above that upper channel boundary yesterday led to a move lower, sending the price back toward the 100-hour moving average at 22,697.33. The index ultimately closed just above that level, keeping buyers marginally in control heading into today’s session.
Gap lower as risk sentiment deteriorates
In trading today, however, the market gapped sharply to the downside as rising oil prices and escalating concerns surrounding the conflict in the Middle East weighed on risk sentiment.
That downside momentum has continued throughout the session, with the NASDAQ currently down roughly 400 points, or about -1.76%.
With the selling pressure building, traders are now turning their attention to the next downside targets.
Key technical levels to watch
The first support comes at the February 17 low of 22,256.76.
Below that level, traders will focus on the March 2 swing level at 22,125 and the March 9 low at 22,061.
A break below that area would open the door for a test of the lower boundary of the channel, which currently comes in near 21,968 and continues to slope lower over time.
For broader context, the November 21 low reached 21,898, which would represent another key downside reference point if the bearish momentum accelerates.
Longer-term retracement level
Looking at the bigger technical picture, the 38.2% retracement of the move up from the 2025 low comes in at 20,491.86.
A move to that level would represent roughly a 14.5% decline from the 2026 high.
Fundamental pressures building
From a fundamental perspective, the closure of the Strait of Hormuz continues to support higher oil prices, which in turn creates pressure on equities.
At the same time, interest rates are also moving higher, with the 10-year Treasury yield now near 4.25%. Rising yields are pushing mortgage rates higher again, adding another headwind for risk assets.
Political backdrop
Politically, rising energy costs and falling stock prices are developments the current administration would prefer to avoid. Both have been frequent talking points tied to the administration’s economic messaging, including references to strong equity markets such as the well-known remark that “the Dow is above 50,000.”
Meanwhile, gasoline prices have also moved higher. According to AAA, the national average price at the end of the Biden administration was around $3.12 per gallon, while current prices are closer to $3.60.
If these trends persist, they could become increasingly important economic and political issues as the November elections approach, muddying the water even further especially since the Epstein story has yet to fully unfold.
This article was written by Greg Michalowski at investinglive.com.
