The Nasdaq forms a bearish head and shoulders pattern

US stock indices see sharp declines

By Raed Alkhedr | @raedalkhedr | 25 August 2023

Demand and supply
  • The Nasdaq index dropped by more than 3% ahead of Powell's speech.

  • Investors take caution ahead of Jerome Powell's speech today at the Jackson Hole Economic Policy Forum.

  • The Nasdaq index saw a decline during yesterday's Thursday session, reaching the level of 14,788 points.

Economic events affecting US stock indices

Amid a risk aversion sentiment, US stock indices sharply dropped during Thursday's trading session. The Nasdaq index closed with a decline of over 3%, nearing the 14,788 level. This occurred ahead of Jerome Powell's speech today at the Jackson Hole Economic Policy Forum, where market participants seek further insights into the future path of interest rates during upcoming meetings.

Regarding economic data, the US jobless claims index decreased, registering 230,000 new claims compared to the previous reading of 240,000 claims. Additionally, the US durable goods orders index contracted approximately 5.1% on a monthly basis, compared to the previous reading that showed a 4.4% growth. Meanwhile, the core index remained unchanged during the same period, recording a 0.5% reading.

Market attention today remains on the second day of the annual Jackson Hole Forum, hosted by the US Federal Reserve, where policymakers from major central banks worldwide share their perspectives.

Key pivotal and technical levels that could impact Nasdaq movements

The Nasdaq index declined yesterday after failing to surpass the resistance level of 15,400 points, experiencing a sharp retreat to the 14,776 level. The index formed a right shoulder for a bearish head and shoulders pattern, and it is likely that if the index breaks the support level of 14,550, representing the neckline support of the pattern, it could further decline to test support levels at 14,200 points. Breaking below this level may extend the downward movement to the 13,300 level.

However, if the index manages to climb from the current levels, it may encounter resistance at the 15,350 level. Surpassing this level could contribute to further upward movement, testing resistance levels at 15,900/16,000 points.