Trading The Close Market Recap - 10/22/2025: Big Red Candle Threatens Tech, Bitcoin & Nvidia After V‑Shaped Bounce

In today's fast-paced market, a single headline can send shockwaves through the indices, separating disciplined traders from the reactive crowd. This afternoon was a textbook example, as a sharp, news-driven sell-off was met with an equally aggressive V-shaped recovery, leaving many investors wondering what comes next. On this afternoon’s Trading The Close episode, Pro Trader Drew Dosek of Verified Investing dissected the volatile price action, revealing critical technical patterns that suggest the market's recent save may be more precarious than it appears.

The session began with heavy selling pressure that intensified around 1:30 PM Eastern. The catalyst was an announcement from the Trump administration threatening to restrict all critical computer software exports to China, a significant escalation in trade tensions. The market reacted instantly, plunging to its lows before dip-buyers emerged with force, erasing a substantial portion of the day's losses. While the recovery was impressive, Drew’s analysis uncovered several bearish chart patterns that are now casting a long shadow over the major indices and key market-leading stocks.

The "Big Red Candle": A Persistent Warning Sign

One of the most powerful technical concepts Drew highlighted is the significance of the "big red candle" that appeared on the charts just a few trading days ago. This large, downward candle represents a period of intense institutional selling, and its range often becomes a new battleground for bulls and bears. Despite today’s impressive intraday bounce, the S&P 500 is still trading within the confines of that bearish candle.

"Until we beat that, you've got to anticipate further downside on the charts," Drew cautioned. “This is very damaging to the pattern on the charts and is alerting a lot of big institutional investors that this is the area to sell.”

This principle isn't isolated to the S&P 500. The tech-heavy Nasdaq 100 (QQQ) finds itself in a nearly identical predicament. After a steep decline today that brought it near the 600 level, it bounced to close around 605.49. However, it too remains trapped within its own big red candle. In technical analysis, this type of price action is often interpreted as a consolidation phase before the next leg down. The probabilities, as Drew explained, favor a downward resolution until price can decisively break and close above the high of that candle.

Should the market manage to rally and overcome this level, it could trigger a "failed move," a powerful technical signal that often leads to a sharp rally as short-sellers are forced to cover their positions. For now, however, this candle acts as a major source of overhead resistance, suggesting that sellers remain in control of the intermediate-term trend.

Sector Divergence and Key Levels

While the major indices painted a similar picture of bearish consolidation, a closer look at different market segments reveals important divergences. The semiconductor sector, tracked by the SMH ETF, was hit the hardest by the China software threats. It plunged over 3% at its lows, breaking below the 50% median line of its parallel channel before recovering late in the day. The fate of this sector is closely tied to the ongoing trade negotiations, with a November 1st deadline looming as a potential catalyst for further volatility.

In contrast, the small-cap Russell 2000 (IWM) displayed relative strength. During the sell-off, the IWM precisely tested the rising support of its long-term parallel channel—the same critical level it successfully defended on October 10th—and bounced sharply. This successful test keeps its uptrend technically intact. For traders monitoring the IWM, the key levels are now clearly defined: support at the rising trendline, currently around 242.42, and resistance at the upper trendline near 256. This resilience in small caps while tech falters could signal an under-the-surface rotation in the market.

Bitcoin's Falter: A Canary in the Coal Mine for Tech?

In today’s interconnected markets, assets like Bitcoin often serve as leading indicators for broader risk appetite. The price action in Bitcoin is currently sending a particularly concerning signal. After a promising move higher yesterday, Bitcoin was decisively rejected, falling back below the psychological $110,000 level to trade around $108,000.

Drew pointed out that Bitcoin is now putting in bearish consolidation at the lower end of its parallel channel. "The longer we hang out down here, folks, and put in this bearish consolidation… that's all putting in bearish consolidation implying a further move to go lower," he explained.

This weakness is critical because Bitcoin and high-growth technology stocks have often moved in tandem. A breakdown in Bitcoin could foreshadow further selling pressure in the Nasdaq and semiconductor stocks. The key support levels to watch are the bottom of the parallel channel around $106,000 and a trendline support near $105,000. A failure to hold these levels would open the door to the next major support zone at $97,650, a move that would likely coincide with significant weakness across the tech sector.

Precious Metals: A Rug Pull and a Glimmering Long-Term Pattern

The precious metals market has been a hotbed of activity, and today's price action in gold provided a masterclass in market psychology. After weeks of intense retail interest, which Drew noted included people lining up around the block in Japan to buy physical gold, the market experienced a classic "rug pull." Overnight, gold plunged through a key inclining trendline, hitting a low of $4,004 before dip-buyers aggressively stepped in.

While the bounce was sharp, Drew warned that the selling pressure is likely not over. The most probable scenario is the formation of a bear flag, where price bounces into resistance—perhaps near the $4,200 level—before consolidating and ultimately heading lower. The next major support target for gold sits at the bottom of its inclining parallel channel, in a range between $3,700 and $3,770.

Meanwhile, silver presents a fascinating dual narrative. While it remains weak in the short term, with downside targets at $46.79 and $44.26, Drew zoomed out to reveal a massive, long-term bullish pattern: a potential cup-and-handle formation. If silver can consolidate and eventually break above the key resistance at $50.78, this pattern carries a measured move target that seems almost unbelievable.

"This pattern can generate a move all the way up here to $89.38," Drew stated, acknowledging the audaciousness of the target. This long-term bullish potential suggests that significant dips, particularly into the support zone around the $44.26 level or the rising trendline just under $42, could represent strategic buying opportunities for patient investors.

Reading the Tea Leaves in Individual Stocks

The day's volatility created telling patterns in several individual stocks, none more important than the market leader, NVIDIA. On its daily chart, NVIDIA is consolidating sideways directly underneath its own "big red candle," forming a textbook bear flag. This pattern alone suggests a high probability of another move down.

However, the weekly chart provides even more powerful insight. NVIDIA has formed a prominent "weekly topping tail," a long wick at the top of a candle that signifies a strong rejection by sellers at higher prices. As Drew explained from his experience, "When you have a topping tail at the top of the chart, that's telling you guys something. That's giving you insight that it's going to be very hard for price action to get back above, close above, and move higher."

The combination of a daily bear flag and a weekly topping tail creates a potent bearish setup. A close below the low of the big red candle at $177.29 would likely trigger the bear flag, opening the door for a measured move down to the next major support level at $167.45.

This concept of powerful bearish signals was echoed in the chart of Carvana. Drew used its price action to reinforce the importance of topping tails, pointing to a massive one from July 31st that has capped every rally attempt since. These patterns provide invaluable clues for managing risk and identifying potential exit points.

Conclusion: A Market Saved, But Not Yet Safe

Today's session was a dramatic tug-of-war. The bulls successfully defended the lows, engineering a powerful V-shaped recovery that demonstrated the enduring strength of the "buy the dip" mentality. However, the technical evidence suggests that the market is far from out of the woods.

The persistent overhang of the "big red candle" on the S&P 500 and Nasdaq, the bearish consolidation in Bitcoin, and the ominous patterns forming in market-leader NVIDIA all point to a high probability of further downside. While the dip-buyers won today's battle, the larger war for market direction is still being waged at these critical technical levels. For traders, this is a time for caution and discipline. The charts have laid out a clear road map of resistance levels and bearish patterns that must be respected until proven otherwise.