This is the NASDAQ all sessions chart, which has seen a sharp sell off since the end of December. Last Tuesday saw a strong show by the Bulls. This must have been a big relief for the Bears as we had made new lows since the spike down in January. It’s not all-good news though as we have plenty of work to do before we can think about this market as Bullish. Trend Resistance comes in today at 1770.25. If this were breached the next objective would be the last failure high at 1831.25. Only a close above the 38.2 Fibonacci Retracement level at 1858.50 would see us really friendly towards this one.
Indicators in Play
Trend Resistance Lines are probably the most basic and easy to understand tools in Technical Analysis. Its just a matter of joining lower highs together with two and some prefer three points of contact. Even these simple lines do have conditions that affect their strength. The more points of contact and the longer the line has held true increases the potency of the line. In this case we have three points of contact going back to the middle of January.
Summary
We have been playing to the short side for some time here. We are approaching Trend Resistance at1770.25. A breach of this would see us take some profit but shorter-term traders may wish to sell here with a tight stop.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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