NDX is completing a complex correction, unless this is a topping pattern. Signals are mixed, let’s take a look.
Geometry:
NDX has closed right above the lower channel boundary on Friday. Another trend line (in red) provides confluence. So far, the channel remains intact. The XLK however printed a rising broadening wedge, a bearish pattern.
Oscillators
We have no bullish divergence on the RSI/MACD, but Stochastic is oversold and due to move up.
Moving Averages:
The Weekly candle, for the first time since the crash of 2020, closed below the 20 week MA. This does not need to be a bearish sign. When we look at July/August 2019, such closes were followed by immediate rallys. But it is a warning sign.
Elliott:
We can count a complex ABC correction (or WXY) with a final 5-wave down move that is complete. It can extend lower into the 61.8% or 78.6% retracements.
Correlations:
DXY appears to break down as expected. Yields appear to weaken. There is resistance at 1.900.
How to trade it:
For those who speculate that the channel will hold, a “slingshot method” entry point could be around 16830 when price breaks the top of the previous candle. Bears may look for a break of the trend line with volume, but the risk of a bounce at the 61.8/78.6 fibs remains.
Geometry:
NDX has closed right above the lower channel boundary on Friday. Another trend line (in red) provides confluence. So far, the channel remains intact. The XLK however printed a rising broadening wedge, a bearish pattern.
Oscillators
We have no bullish divergence on the RSI/MACD, but Stochastic is oversold and due to move up.
Moving Averages:
The Weekly candle, for the first time since the crash of 2020, closed below the 20 week MA. This does not need to be a bearish sign. When we look at July/August 2019, such closes were followed by immediate rallys. But it is a warning sign.
Elliott:
We can count a complex ABC correction (or WXY) with a final 5-wave down move that is complete. It can extend lower into the 61.8% or 78.6% retracements.
Correlations:
DXY appears to break down as expected. Yields appear to weaken. There is resistance at 1.900.
How to trade it:
For those who speculate that the channel will hold, a “slingshot method” entry point could be around 16830 when price breaks the top of the previous candle. Bears may look for a break of the trend line with volume, but the risk of a bounce at the 61.8/78.6 fibs remains.