Why I think bears won the NAS battle but bulls will win the war
I said in my previous idea that I went long at 12672 and below are the reasons why.
- Was hovering slightly over the weekly 20EMA which has been great dynamic support for the index over the last year.
- NDX appears to be forming a flat bottom at 12760 and we can see how well that has been holding since January; it is also the 0.618 FIB from Feb. highs to October lows. Bears tried to break 12760 3 times during NY sessions this week only or bulls to bounce back sharply off this level. It was only broken during the Asian session on Friday when I bought at the lows of the day betting that weekly 20 EMA will provide support.
- Despite the heavy sell pressure and volume throughout the week and particularly the alarming levels on Thursday (highest since September), Friday's buys were also particularly high (highest since November); hence the wild volatility.
- VXN (the volatility index for NAS100) has not spiked to alarming levels all week despite a 1300pts drop at one point. We have seen a bigger spike in the last week of January despite a drop that is not as substantial as the current one.
- NQ 4hr RSI has been flashing bullish signs and divergence for the past 2-3 sessions. Additionally, daily RSI hit its lowest levels since March.
Next week bulls need to break-out from the main downtrend TL and overcome dynamic resistances, especially the 50 day EMA for a chance to go higher. If we gap up Monday as a result of stimulus news and Asia/Europe don't tank it, there's a very good chance we see a reversal sooner than later. I don't think the bond market fears will have long-term implications as of now given the current policies.
- Was hovering slightly over the weekly 20EMA which has been great dynamic support for the index over the last year.
- NDX appears to be forming a flat bottom at 12760 and we can see how well that has been holding since January; it is also the 0.618 FIB from Feb. highs to October lows. Bears tried to break 12760 3 times during NY sessions this week only or bulls to bounce back sharply off this level. It was only broken during the Asian session on Friday when I bought at the lows of the day betting that weekly 20 EMA will provide support.
- Despite the heavy sell pressure and volume throughout the week and particularly the alarming levels on Thursday (highest since September), Friday's buys were also particularly high (highest since November); hence the wild volatility.
- VXN (the volatility index for NAS100) has not spiked to alarming levels all week despite a 1300pts drop at one point. We have seen a bigger spike in the last week of January despite a drop that is not as substantial as the current one.
- NQ 4hr RSI has been flashing bullish signs and divergence for the past 2-3 sessions. Additionally, daily RSI hit its lowest levels since March.
Next week bulls need to break-out from the main downtrend TL and overcome dynamic resistances, especially the 50 day EMA for a chance to go higher. If we gap up Monday as a result of stimulus news and Asia/Europe don't tank it, there's a very good chance we see a reversal sooner than later. I don't think the bond market fears will have long-term implications as of now given the current policies.