Mapping the Market: Nasdaq may be ready to bolt

Symptomatic of the Nasdaq’s narrowing range is the confluence of the 50- and 100-day moving averages near the 26,000 level, which has exerted a gravitational pull on the index.

The Composite ended Tuesday at 25,981.57. Should a breakout occur, that 26,000 area is likely to become an important line of demarcation for both sellers and buyers.

If the index holds above that area, bulls are likely to target a move above resistance near 26,725, where the trendline from the early June record high sits. Trendlines connect previous highs or lows and can slow or accelerate price movements. The August 13 high at 26,875.52 would become the next focus, followed by the 27,190.21 June 1 record intraday peak, according to LSEG data.

If, however, the Nasdaq were to fall convincingly below the support near 26,000 and also drop below a trendline extending from the March low, and the August 24 low at 25,910.82, bears might push for a return to the June 9 low at 24,980.38. Beyond that, the rising 200-day moving average near 24,507, which is near the July 29 low of 24,425.34, would become the next focus.

• Nasdaq moving sideways since early August
• Moving averages near 26,000 key
• Gains target 26,725, 26,875.52 and 27,190.21; downside focus is on 24,980.38, 24,507 and 24,425.34

The Nasdaq Composite has spent more than a month shuffling sideways, but technical analysis indicates the tech-heavy benchmark may now be preparing for a break.

One of the clearest signs of a potential jolt out of the weeks-old range is that the daily Bollinger bandwidth, a measure of historical volatility, is at its lowest level in more than five years. Such low readings often precede a larger move — and the start of a new trend.