Long

Nasdaq 100 Index - Weekly Chart

Updated

This is a technical analysis on NDX on weekly time frame. Everything is explained on the chart itself.

Two days ago I noticed this huge falling wedge pointing towards Fibonacci 0,5 and a significant accumulation zone. When the market opened there was a final capitulation in my eyes and an immediate bounce-back from Fib 0,5. Take a look at RSI.

I noticed the very same pattern in S&P 500 (see pictures down below) and for me this is not a coincidence that this pattern forms in both of these indexes and marks the bottom this time around.

So I did open leveraged long positions in the most oversold growth stock names like Palantir, Spotify, etc. that I believe in.

Before and during the fall you could read the news that encouraged the retail investors to buy the dip and all who did that are unfortunately holding the bags now. But now you read the news from Morgan Stanley and other institutions, strategist, analysts and alike at CNBC that the market will fall another X%.

When I read this type of fearmongering by the media while the technical analysis says otherwise, it's the perfect combo that this is the bottom for now. The least is that we will see a short covering rally which will be fueled by return of the retail investors and the money that has been waiting in the sidelines for such an opportunity plus the profits that short sellers have made and now has to be invested somewhere.

I might be wrong but this is the outlook from my perspective.

Like & subscribe if you want to see similar analysis and updates. Enjoy!

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Disclaimer: This is not an investment or financial advice. I'm just sharing an idea for educational purposes.

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Snapshot from S&P 500 in daily time frame to show the falling wedge pattern in more detail.

Snapshot from S&P 500 in 3 weeks time frame to show where it found support.

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Lets take a look at 10 years treasury yield.

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Now the bad news!

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Let's take a look at VIX as well. We see a similar theme as VXN in the above snapshot.

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Finally let's take look at Nasdaq 100 E-mini Futures. I find this chart most interesting.

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Alright one more thing before I'm done. Let's zoom in to analyse the candlesticks in the chart above.

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I've suggested some levels where you could set your price targets. Remember this is not set in stone and you should act as the price reacts to various resistance levels plotted on the chart. It should give you a general idea.

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Let's take a look at Nasdaq in log scale with EMA150 in weekly time frame.
Look at how many times it has supported a correction.

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Let's zoom into the daily time frame.

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I want to conclude my analysis by saying that 11700 is a crucial support level. It seems that we are seeing bulls fighting back at this level and we might see a rebound from this point.

However if this support level breaks by for example a monthly candle close below 11700, we will see a massive flush down and confirmation of a bear market followed by a crash similar to the one in 2008 or even the dot-com crash.

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This is good news for the stock market in general.

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Do you see what I see?

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Same formation in S&P 500

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Positive signal in US500

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Positive signal in Nasdaq 100 E-mini Futures

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A breakout was in the making yesterday but it failed today.

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Double bottom?

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This is very bullish development!

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Let's take a look at the day time frame. Adjusting the falling wedge according to the latest price action, clearly displays that the wedge is still in play and not yet broken to the either side.

What's more interesting is that we have a very distinct Pin Bar candlestick right at the lowest point of the wedge. Could this be the signal of a potential bottom followed by a rally? Let's see what next week brings.

I personally lean towards buying the dip at this point with long positions, because to my experience falling wedge patterns especially with this magnitude tend to be followed by a rally, not always but most of the time.

Also notice that 1 week EMA200 is just about 1% below the lowest point of this Bin Bar and I assume many traders are prepared to go long when a touch occurs.

So what could happen next in my humble opinion is that from this point on:
- we see the start of a rally by a bullish candle
- some consolidation sideways price action until 1W EMA200 catches up followed by a breakout
- a final capitulation to touch 1W EMA200 and a bounceback to break the wedge upwards

Keep an eye on the plotted EMA15. A strong and clear candle closing above this moving average will confirm the rally.

Finally the worst case scenario is a weekly candle close below 1W EMA200. Then it is "Goodnight Irene" for the bulls.

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Everything is playing out according to this technical analysis. Here we can see that the wedge is broken to the upside. Defeating EMA15 which I mentioned previously is the last confirmation for those who are more defensive in opening long positions.

With that said, anything could happen but those of us who were early and went long ignoring the media noise and fearmongering, relying on technical analysis are already in profit and can close our positions if things go wrong for any reason.

Good luck!

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Bull flag pattern in 4 hour chart. Let's see if it plays out or not.

AktieAI

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