Well, the Island Reversal that kicked off the thread last week has proved to be the powerful trend reversal indicator suggested so far, and the Naz has now risen over 100 points north, and is well clear of the 100ema shown in the 10min timeframe.
No hint of retracement yet after Tuesdays big rally which seems bullish in the face of some negative news/data yesterday, and likely a sign that the market is expecting more upside......
Suspect that we might see a pullback before the long holiday weekend on both sides of the pond though.......
As mentioned yesterday, the market was expecting, and got, more upside and yet another opening gap just waiting to be filled and so it was – ND on RSI signalling the top of the move at 1992 resistance and PD signalling the bottom at 1968 support.
Looking for a likely pullback to red today after 5 green days for the Naz and the long weekend ahead.
All of these moves/chart profiles are mirrored virtually identically on the tradeable NDX (Nasdaq 100 index) and QQQ (Nasdaq 100 index tracking stock) charts attached – spot the difference – not much..!……
If a stock gaps up U$ 4 or 5 after a piece of good news and then stays strong for several days after that, would you say that the gap is likely to be filled if the piece of news that caused the gap has now resulted in a truer valuation of the Company's stock price ?
TradeSmart: Great charts and explanation
Salty: The discussion here focuses on gaps almost always being filled. While that occurs often there are other patterns that a good number of traders I know look for called false gap retracements.
Well, the rising wedge triangle mentioned yesterday did signal downside with an ND RSI top at 1991 ish resistance showing the way down, but only as far as a clear intraday ‘W’ bottom at 1973 with PD RSI confirming support; sparking a late rally right back to resistance and a 7th consecutive win for the Naz……!
Looks ready for a pullback to me with ND quite pronounced on the 10min chart, but if resistance at around 1991 gets taken out, a test of channel resistance at 2010 ish could be on the cards shortly imho…......
The first ‘red’ day in 8 for the Naz, but only just, closing a mere –1.79 points down….
Return trip intraday action, opening with minor gap up to a ND top on RSI signalling a pullback off resistance at 1997, falling to find support at 1978 ish confirmed by a short duration double-bottom on the price and RSI just below the 100ema, causing a reversal and a surge to prior resistance…..(slightly aided by a falling oil price…… )
Could be a volatile, news dominated, couple of sessions ahead with OPEC today, and NF payrolls tomorrow ……….
A big ‘pop’ opening on Friday creating a huge 20+ point gap, but filling Thursdays gap down……a rise to the 1995-98 much tested resistance zone, and ND on RSI signalling downside and a return trip to the close….
Futs today assuring another ‘pop’ opening, but the lower gap unfilled from Friday could well act like a magnet…......
Well, we got yet another ‘pop’ opening followed by a bullish performance with no hint of any magnetic pull from the two gaps below, but the Naz will almost undoubtedly retrace to address these soon……
Top line channel line resistance has been reached at prior S/R level 2020 ish (60min chart) so maybe we can anticipate some consolidation/pullback before new direction is assumed….
I’ll quit daily postings on the thread now that maybe a short term ‘top’ has been reached (?) and full confirmation of the power of the ‘island reversal’ setup that kicked off the topic in mid-May; it wasn’t intended as a long term study - in future I’ll just post any ‘major’ setups that I notice.
If you are trading the Dow/S&P, it’s well worth keeping an eye on the Naz, as it often shows clear reversal signs first ie:- the Naz had decisively reversed off its 2150ish high at the end of January 04 and it was mid February before the Dow/S&P followed suit – the Naz had headed north from its island reversal on 18th May; the Dow/S&P didn’t move until 25th May….
Since the last post over 2 weeks ago, the Naz has retained it’s bullish profile, with a minimal 38.2% fib pullback signalled by the ND RSI at the 2020 ish high, and forming a bull flag just under the resistance of the top trendline.
As of yesterday, we have a breakout north which is now approaching prior resistance in the 2032 area….
Very pronounce ND RSI on the 10min chart leaves little doubt that a pullback from resistance is likely soon……..