Here is a classic “trap” situation for market participants, especially those that follow technical analysis. I personally think technical analysis is nearly useless, except for the fact that other people find value in it, which means that the TA playbook can be used against other participants. Here is what I think is going on, although this is about as much speculative quackery as the analysis of charts, and thus I suggest treating this post as entertainment value only:
Blue lines: So what’s happening is you see the trendline is broken – technical analysis 101 recommends bailing out once the trendline is broken and shorting.
Red lines: This is a classic “descending triangle” situation, where the Nasdaq is attempting to hold support at the 10,800 level. TA 101 says once this support line is broken, that things are going to sour.
Green line: All of these retail investors at this point, with their “education”, will decide this is the point to capitulate and sell out their technology holdings because clearly things are going down. And indeed, it will be for a little bit as they bail en masse.
Except it will stop and rebound and confuse the crap out of everybody that has taken their chart-reading education.