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We’ve got one for all of you equity and CFD traders out there! The Nasdaq 100 index has fallen down to a previous support area…is it time for the bulls to hop in?

Is the selloff done in Nasdaq 100?

NAS100 4-Hour Chart
NAS100 4-Hour Chart

On the four hour chart above of the Nasdaq 100 index, we can see the market has taken a nose dive as traders price in fears that rising inflation / bond interest rates may force the Federal Reserve to raise interest rates / reduce stimulus.

After topping out just under the 14,000 handle last week, we’re now seeing the index seemingly bottom out at the previous support area around 12,800. Is the sell off done?

Well, we just saw Fed Chair Jerome Powell testify earlier today, commenting that inflation is not a threat and that the outlook on the economy remains “highly uncertain.” It looks like this eased fears that the Fed will tighten monetary policy given that the selloff has halted, so it’s quite possible this may be the short-term bottom.

And if you’re in that camp thinking so, then a simple support play can be made at these levels for a solid potential return-on-risk using a tight stop on the other side of the 12,800 support area and target recent swing highs and beyond.

But if you’re the camp that thinks inflation and interest rates will persist higher, then today’s bounce off of Powell’s comments may be short-lived. In that case, watch out for a solid break below the 12,800.00 level to potentially short the market. A break there may attract momentum traders, which could mean that things could get ugly for the Nasdaq 100 very quickly.

What do you guys think? Is the sell-off overdone? Is Powell’s assurance of no tightening ahead / no inflation threats enough for traders to forget about rising rates?  

Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.