Technical Levels and Market Dynamics
Currently, the 200-hour moving average acts as support, while the 100-hour moving average is a resistance, putting the index between these key technical levels. Sellers have been defending the 100-hour moving average so far, either reducing exposure or initiating short positions.
Long-term, equities typically favour buyers, but reversals often occur at technical inflection points, especially near resistance. The 100-hour moving average now serves as a pivotal test. If sellers maintain control and push prices lower, their influence may grow. Conversely, if buyers can break above this level, it could lead to further upward momentum, bolstered by the support of the 200-hour moving average.
We are watching the Nasdaq test short-term resistance around its 100-hour moving average. After a sharp drop following last Friday’s jobs report, buyers stepped in to defend the 200-hour moving average. This action has created a tense standoff to begin the week of August 4, 2025.
The index is currently caught between the 100-hour MA resistance at 20,972 and the underlying 200-hour MA support. Today’s early strength is encouraging for bulls, but the failure to break above that 100-hour mark so far shows sellers are still active. This kind of price compression often leads to a sharp move in the coming days.
Strategic Options for Traders
Looking at the data, the jobs report on August 1st showed 210,000 new jobs created in July, a figure slightly hotter than expected that reignited concerns about Federal Reserve policy. Combined with a recent core CPI reading for June 2025 that held stubbornly at 3.1%, the market is nervous about potential hawkishness at the upcoming Jackson Hole meeting. The VIX, a measure of expected volatility, has reflected this by creeping up to 15.8 from its summer lows.
For traders anticipating a rejection at this level, buying put options on the QQQ exchange-traded fund could be a prudent move. This would offer downside protection or profit if sellers regain control and push the index back toward its 200-hour moving average. A move below that support could trigger a more significant correction.
Conversely, if buyers push the Nasdaq decisively above the 20,973 level, it would signal a failed breakdown and could spark a rally. In this scenario, call options would allow traders to capitalize on the upside momentum. We saw a similar pattern in early 2024, where a strong defense of a key moving average led to a sustained rally for several months.
Given this tight range and the conflicting economic signals, some traders may consider strategies that profit from a significant price move in either direction. A strangle, which involves buying both an out-of-the-money call and put option, could be effective. This approach would benefit from the increase in volatility that is likely to occur once the index breaks out of its current confinement.
