Added to yesterday's S&P500 fun, we'll now take a quick look at the US Nasdaq.
First of all, and as the title rightly proclaims, we have a likely head and shoulders forming. Yes, it's ugly as , but according to author Thomas Bulkowski, the ugly ones are the ones that tend to vastly outperform the crystal clear ones. The reason is simple: the ugly ones are harder to identify and thus there are fewer traders who exploit them. With the clear ones, on the other hand, they tend to become reverse self-fulfilling prophecies as they are ideal candidates for squeezes in the opposite direction.
If this H&S were to play out we'd be looking at a technical target of $13 300, which itself nicely aligns with a horizontal support.
There are two things in particular that speak in favor of this to occur.
1) We have already seen lower highs and lower lows - as in the ABC's of technical analysis to determine when a trend has changed.
2) On September 16 the RSI made an upper bearish blue closing from below after having sailed down from continuously high levels. This is THE biggest sign of downside to follow. And the remarkable thing is how this reversal sign was given a mere -1,17% from the absolute all-time high. For more on these immensely powerful RSI strategies, please watch the RSI trilogy.
With that said, I would not be too surprised if the price were to temporarily break the diagonal resistance line. This would trick the market and perma bulls that a recovery is in store. This would then likely be rejected at the $15 170 area.
First of all, and as the title rightly proclaims, we have a likely head and shoulders forming. Yes, it's ugly as , but according to author Thomas Bulkowski, the ugly ones are the ones that tend to vastly outperform the crystal clear ones. The reason is simple: the ugly ones are harder to identify and thus there are fewer traders who exploit them. With the clear ones, on the other hand, they tend to become reverse self-fulfilling prophecies as they are ideal candidates for squeezes in the opposite direction.
If this H&S were to play out we'd be looking at a technical target of $13 300, which itself nicely aligns with a horizontal support.
There are two things in particular that speak in favor of this to occur.
1) We have already seen lower highs and lower lows - as in the ABC's of technical analysis to determine when a trend has changed.
2) On September 16 the RSI made an upper bearish blue closing from below after having sailed down from continuously high levels. This is THE biggest sign of downside to follow. And the remarkable thing is how this reversal sign was given a mere -1,17% from the absolute all-time high. For more on these immensely powerful RSI strategies, please watch the RSI trilogy.
With that said, I would not be too surprised if the price were to temporarily break the diagonal resistance line. This would trick the market and perma bulls that a recovery is in store. This would then likely be rejected at the $15 170 area.