Nasdaq 100 - How often can history repeat itself?

Just taking a look at the Nasdaq 100 after mixed tech earnings and ahead of the FOMC later in the day. Currently, the index is trading at around 17,286, we can see an engulfing candlestick in yesterday’s session towards the downside, which has closed below Monday’s open. In theory, this is a bearish indication that could see a further decline. However, with the FOMC later in the day and more earnings yet to come, the market should steady itself before more information is released. Nevertheless, let’s break the chart down from a technical outlook. Looking at the history of the chart. We can see back in 2023 after the January rally, February saw a sell-off going into March on worries of future growth and rising interest rates. However, the AI news fed into the markets creating a surge of around 36% from mid-March to mid-July. From July-October was the period of great profit taking and a healthy market correction, followed by the Santa rally to finish the year. What’s interesting to see here is the size of the retracement, both periods (Feb-Mar & Jul-Oct) saw a 10-11.5% retracement. Therefore, based on previous price action and history, with seasonality demonstrating that February tends to be a weak month, it cannot be ruled out that yet another correction of 10-11.5% isn’t forthcoming. Additionally, if a correction were to occur, the approximate duration would take us to mid-March once again, just ahead of the next Fed meeting (on the basis of past chart history).

Heading over to the technical indicators, we can see slight formations of bearish divergences on both the MACD and RSI on the daily timeframe. The daily timeframe tends to be more sensitive and therefore can be less accurate than the weekly/monthly, but it can also be the timeframe where early trends are picked up. In addition, the MACD seems like it could now turn negative and the RSI plummeted after yesterday’s fall to 58.