Monday’s Nasdaq session began on a bearish note, marked by a gap down that signaled a day dominated by selling pressure. Key VWAP levels, including the monthly VWAP, played a pivotal role throughout the session, highlighting critical resistance.
AI Disruption and Market Sell-Off
The sell-off on Monday was driven by significant developments in the artificial intelligence sector. Chinese startup DeepSeek introduced a highly cost-effective AI model, raising fears of potential disruptions in the industry. This announcement caused sharp declines in major U.S. technology stocks, with Nvidia suffering a historic 17% single-day loss. Other tech leaders, including Microsoft, Meta, and Alphabet, also saw declines ranging from 2.2% to 3.5%.
Investors began reassessing the high valuations of U.S. tech companies, which added to broader market uncertainty and intensified the Nasdaq’s downward trend.
15-Minute Chart: Intraday Price Reactions
The Nasdaq gapped down at the open, setting a bearish tone that echoed across the Asian and European sessions. Sellers drove the price sharply lower early in the day, reinforcing strong bearish momentum. The session low of 20,763 aligned with the New York Initial Balance (NY IB) from 13th January, a level where buyers attempted to stabilise the market.
From this low, the price staged a modest recovery, testing the monthly VWAP (orange line). However, the recovery was short-lived as the price faced a strong rejection at this critical resistance level. This rejection signalled the end of any upward attempt and left the market consolidating for the rest of the session as traders awaited a clearer directional move.
The monthly VWAP remains a key level to monitor in the upcoming sessions. A sustained breakout above this level could pave the way for bullish momentum, potentially targeting the 22,000 mark or higher. On the other hand, a break below 21,100 would likely confirm continued bearish pressure, increasing the chances of retesting Monday’s session lows of 20,763.
