Yesterday’s U.S. inflation report triggered significant volatility in the markets, causing a sharp drop in indices, followed by a strong recovery. As a result, indices are now pushing significantly higher, with NASDAQ at a key technical level.
The index is attempting to break out of a symmetric triangle, marked by blue lines. A confirmed breakout to the upside would suggest a continuation of the bullish momentum, especially if the price manages to hold above the upper boundary of the triangle.
However, as is often the case with triangle breakouts, a series of horizontal resistances must be cleared before a full bullish confirmation. In this case, the orange resistance lines represent the highs from the second half of January. A daily and weekly close above the triangle would generate a strong long-term buy signal, while a break above the orange resistance levels would further confirm the bullish breakout.
For now, as long as the price remains above the upper boundary of the triangle, sentiment remains positive. However, if the price drops significantly back inside the formation, it could be considered a false breakout, invalidating the bullish momentum and shifting sentiment back to neutral or bearish.
Traders should closely monitor the daily and weekly closes to determine whether NASDAQ is confirming a bullish continuation or setting up for a reversal.