NDX: Giant Continuation Pattern.

Evaluating the bigger picture (daily) chart of NDX. It appears to be trading within a diagonal triangle or possibly a pennant. To me this is a trend continuation pattern, and the major trend is clearly bullish. Price has just bounced off 5600, which may be the beginning of the 4th leg to complete Wave D. If this pattern stays intact, and price sells off to form the bearish leg Wave E, AND it happens to reverse off of the .618 level of the recent bullish swing at the 5555 area, that would be a great place to anticipate bullish reversals on a smaller time frame. (1 hour). If the market can complete the triangle at Wave E, the upcoming bullish leg can be a longer term breakout to new all time highs, but a more conservative and reasonable target is 5780 area. What would negate this entire scenario is a price break below 5425 which is a .382 of the entire bullish swing beginning from 11/16. The way I intend to swing trade this is to wait for the market to conform to the 5 Waves and look for a bullish reversal at the completion of Wave E, with a target set at 5780. That is a 225 point potential. I will have to further evaluate the structures in place if Wave E completes in order to determine my risk parameters. I will update this analysis as the market plays out, but this is what I anticipate based on current price action. Since this a major index, this also implies stronger markets in general over the next few months if this scenario plays out. What do you think?

MarcPMarkets

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