Master the NASDAQ: key indicators, chart analysis techniques, and Top FX brokers

4 min readAug 26, 2024

Analyzing stock market charts is a key skill for anyone wanting to understand market trends and make smart trading decisions. Whether you’re new to trading or have experience, learning to read these charts can help you navigate the financial markets better. In this article, we’ll look at the NASDAQ Composite using real data from Investing.com and explain important indicators and patterns traders use.

We’ll cover things like moving averages, volume analysis, RSI, and support and resistance levels. Each of these components will be broken down to help you understand how they fit into a trading strategy. This guide aims to give you practical tips on using these tools in your trading. Keep in mind that this is not financial advice — always do your own research and consider talking to a financial advisor before making any trading decisions.

A thorough guide to analyzing the NASDAQ chart

Now that we’ve set the stage, it’s time to dive into the analysis of the NASDAQ Composite chart. We’ll review each key indicator — moving averages, volume, RSI, and candlestick patterns — to comprehensively understand the current market conditions. By the end of this section, you’ll see how these elements come together to form a potential trading plan.

Disclaimer: The following is an educational guide for beginners on how to analyze stock market charts. This is not financial advice. Always do your research and consider consulting with a financial advisor before making any trading decisions.

Understanding the basic NASDAQ chart elements

1. Candlesticks

Each candlestick on the chart represents a single day of trading. The body of the candlestick shows the opening and closing prices, while the wicks (shadows) represent the high and low prices for the day.
Green candlestick: Indicates that the closing price was higher than the opening price (a bullish day).
Red candlestick: Indicates that the closing price was lower than the opening price (a bearish day).

Check out: Understanding Japanese candlestick charts: basic figures and main patterns

2. Moving Averages (MA)

9-Day Moving Average (MA): This is a simple moving average calculated by averaging the closing prices of the last 9 days. It is used to smooth out price data and identify the direction of the trend.
Position relative to price: When the price is above the moving average, it signals a bullish trend. When the price is below the moving average, it signals a bearish trend.
In this chart: The current price of the NASDAQ Composite is above the 9-day MA (16,928.34), indicating a bullish short-term trend.

3. Volume analysis

Volume bars: Volume represents the number of shares traded during a specific period.
Green volume bar: Indicates that more shares were bought than sold (bullish).
Red volume bar: Indicates that more shares were sold than bought (bearish).
Volume spike: A significant increase in volume can confirm the strength of a price move.
In this chart: Recent green volume bars suggest that the market is experiencing strong buying pressure, supporting the upward movement in price.

4. Relative Strength Index (RSI)

RSI (14): This is a momentum oscillator that measures the speed and change of price movements. It ranges from 0 to 100 and helps identify overbought or oversold conditions.

Levels to watch:

Above 70: Overbought conditions, which might indicate that the asset is overpriced and could see a price correction.
Below 30: Oversold conditions, which might indicate that the asset is underpriced and could see a price rebound.
Between 30 and 70: A neutral zone.
In this chart: The RSI is currently at 56.31, suggesting that the market is in a neutral state with a slight bullish bias. It’s not in overbought territory, indicating that there might be room for the price to move higher.

5. Candlestick patterns

Recent candlestick behavior:

Bullish candles: A series of green candles indicate a strong buying momentum.
Doji or small body candles: These might indicate indecision in the market. If these appear after a strong trend, they could signal a potential reversal.
In this chart: The recent pattern shows green candles, suggesting a recovery from the previous downtrend. This might indicate a continuation of the upward movement if it breaks above resistance levels.

6. Support and resistance levels

Support: A price level where a downward trend might pause due to a concentration of buying interest.
In this chart: The 9-day MA around 16,928.34 is acting as a key support level.
Resistance: A price level where an upward trend might pause due to a concentration of selling interest.
In this chart: The area around 17,700–17,800 is acting as a resistance level. If the price breaks above this level, it could signal further gains.

Putting it all together: NASDAQ trading plan

Current trend: The NASDAQ Composite shows a bullish trend with strong volume support and a neutral RSI that leans towards bullishness.

Potential trade setup:

Entry point: Consider entering a long (buy) position if the price breaks and closes above the resistance level of 17,700–17,800 with strong volume.
Stop loss: Place a stop loss below the 9-day MA (around 16,900) to limit potential losses if the market reverses.
Take profit: Set a target at 18,000 or trail your stop loss as the price moves higher to capture gains while reducing risk.

Continue reading:

From charts to trades: analyzing the NASDAQ with key indicators and Top FX brokers

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