In this post, I will take a purely technical approach to the Nasdaq's weekly chart, using fractals from the S&P500's 2018 price movement.
2018, S&P 500 - On the left side, we can see the weekly chart for the S&P500 Index (SPX) - The index was at an uptrend, moving above the Ichimoku cloud - Due to fear, uncertainty, and doubt in the global economy, a flash crash was triggered - The index tested the 200 Simple Moving Average (SMA), and bounced right back up, forming a V shape recovery - At the bottom, the Relative Strength Index (RSI) was also at oversold territories - During the quick recovery, the Moving Average Convergence Divergence (MACD) formed a golden cross, confirming the uptrend - Prices seemed to have topped out once again, after forming a double top - While the MACD was showing convergence, the bearish histograms were not big enough to provide confirmation for a potential trend reversal - Eventually, prices broke through resistance, and continued to rally upwards
2020, Nasdaq Index - On the right side, we can see the weekly chart for the Nasdaq Index (IXIC) - The overall setup is very similar to that of SPX in 2018, including the Ichimoku clouds - The index bounced on the 200 SMA - While it bottomed out temporarily, the RSI reached oversold territories - Just like the S&P, the MACD provided a lagging confirmation - The current death crosses that have taken place did not demonstrate significant bearish momentum - The bearish histograms are extremely small, and the death crosses almost immediately get negated - We are currently seeing a double top form on IXIC's weekly - If this fractal turns out to be correct, this would be a phase of consolidation before breaking out to rally further
Reminder - The stock market is not driven by technical factors. This is merely an analysis taking a technical approach to interpreting the current price action on IXIC's weekly chart - The stock market is unaffected by certain technical indicators. Divergences and golden and death crosses of oscillators get easily negated - It's important to note that for both market situations, the drop was caused by external factors - fear, uncertainty, and doubt induced by external factors - The fundamentals of the companies that constitute the index did not change much - For more information on the fundamental aspects, check out my other analysis on Nasdaq's breakout
If you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight.
you do really great work. How can I learn to do this kind of TA? where did you start?
Michael_Wang_Official
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@JesseRyanLongoria, Hey Jesse! There are a lot of books that you can start reading, but I believe the best way to learn quickly is through a mentor. If you have any questions, feel free to ask. I'll also be occasionally posting educational content related to technical analysis as well so stay tuned!
JesseRyanLongoria
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@Michael_Wang_Official, YES! I will be following your work closely. I understand the basic idea of TA but can you link something that will help me learn the fundamental pillars of TA for a beginner? Like a best first step?
Michael_Wang_Official
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@JesseRyanLongoria, So I need you to first understand that learning to conduct technical analysis and learning to trade are two completely different skillsets. There are many good technical analysts on tradingview, but only a few good traders.
If you want to get started with TA, here are some topics and concepts you want to research first:
1. Identifying support and resistance
2. Moving Averages
3. How to read candlestick charts
4. Technical Indicators (RSI, MACD to start off with)
5. Candlestick Chart Patterns
You can find all sorts of material on this topic easily. Once you understand these 5 topics, that's when you can start moving into the intermediate level of TA by finding out which areas you need more knowledge on.
JesseRyanLongoria
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@Michael_Wang_Official, Thank you! I will start there and check back in after I cover these topics. Do you favor any particular source/ author? or no?
sipiceanu
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Beautiful charts and supporting analysis, well done, this is useful ...
Michael_Wang_Official
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@sipiceanu, Glad you found it useful. Thanks for the support!
sipiceanu
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@Michael_Wang_Official, definitely. Look forward to your ideas. I agree with all of the above, I think it has been proven by the 87% of companies that have reported positive earnings that everyone is stable with the economy, and even the punished stocks after earnings, were punished for very minor misses, which means the fearful Bears are trembling in their pants, and I see a serious Bull market coming up, and those like yourself who see this opportunity will be seriously rewarded ... I also believe that the markets response to the Stimulus delay has finally proved to be a crock of shit, and it's now boring old news, and fear for no reason ...
Michael_Wang_Official
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@sipiceanu, Indeed, very well said. Thanks you so much for sharing your insight.