NASDAQ seems to have completed its initial impulse drop from 12500 mark towards 10678 lows. The overall trend remains bearish but intraday short term rallies do remain possible towards 12000 mark. It should be taken as yet another opportunity to initiate fresh short positions.
NASDAQ probable wave counts are as follows: The indice had earlier dropped through 6609/29 lows in March 2020, which was a larger degree Wave ((4)) termination point. The subsequent rally was clearly sub-divided into 5 waves and managed to push through 12500 levels.
Ideally, an impulse is followed by a corrective drop but in this case it could differ. Since the termination around 12500 could be a larger degree Wave ((5)), NASDAQ might be preparing for a similar degree corrective wave in the next several weeks.
A minimum drop towards March 2020 lows around 6600 remains high probability from here. Furthermore, the process might have already begun since the indice has dropped below its support trend line and also taken out initial support at 10850.
Looking at the lower degree wave structure, NASDAQ might have carved a lower degree impulse drop between 12500 through 10680 levels, (not labelled here). If the above is correct, we should witness a similar degree corrective wave towards 12000 mark in the next several weeks.
Traders might remain inclined to hold short positions taken earlier and also look to sell more around 12000 mark. The protective stop might be placed above 12500 while projected targets below 6600 levels over the next several weeks.
Technical Analysis Team
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