Nasdaq Composite Ending Diagonal: Reversal soon
Updated
Recently Nasdaq Composite has been dropping quickly alongside other major stock indexes. Here is a very obvious ending diagonal in Waves Theory, or 'falling wedge' as technical analysts call it. This kind of fast price decreasing coupled with narrowing space of bounce back is caused by extreme panic selling, which will turn into panic buying once investors realise this is not end of the world.
Looking at this hourly chart, the ending diagonal from 4 March forms Wave C of the correction. The ABC correction from 19 Feb 2020 is a textbook style sharp, zigzag correction, almost perfect example to study upon. IXIC has dropped to the 50 month moving average at 6800 and bounced back quickly, which is another signal that this correction is finishing soon. When IXIC finally reverses, it will rise to 10 day moving average, and very possibly drop from there a bit.
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Nasdaq Composite has neatly broken above this ending diagonal today. Touching 10-day moving average, it might drop a bit from 7300, but we will very likely not see 6600 again! Not again in a very long time. After 7388, next major resistance is 7900.
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