Nasdaq 100 E-mini - Key Support Zone will Determine Next Week
Updated
After publishing my most recent analysis of the current Nasdaq 100 trends, I decided to publish a look at the short term technical patterns as well. In my experience, futures tend to reveal a more complete picture of these patterns.
Nasdaq 100 E-mini's have had a busy September. After testing the top of the primary uptrend on September 2nd, the price fell out of the trend and has been forming a descending wedge ever since. The price found a double bottom on September 24th and rose to form a rising wedge inside of the larger descending wedge.
The announcement of Trump's COVID diagnosis on October 1st caused a knee jerk reaction which led the price to fall out of the rising wedge while simultaneously completing a head fake of the descending wedge.
The textbook price target for the rising wedge is shown with the dotted line. In order for the price to reach this target, it must break through the support zone shown in pink. On the other hand, a failure to break this level would compromise the rising wedge breakout and signal a potential upwards breakout of the descending wedge.
The support zone is the current determining factor for the conclusion of the descending wedge. An upwards rebound would easily trigger a more sustained rally to test the underside of the primary uptrend. A downwards breakout from the support zone would cause the price to test the top of the secular trend. From that point, the analysis discussed in my last post predicts the price would fall further and test the bottom of the descending wedge.
Nasdaq 100 E-mini's have had a busy September. After testing the top of the primary uptrend on September 2nd, the price fell out of the trend and has been forming a descending wedge ever since. The price found a double bottom on September 24th and rose to form a rising wedge inside of the larger descending wedge.
The announcement of Trump's COVID diagnosis on October 1st caused a knee jerk reaction which led the price to fall out of the rising wedge while simultaneously completing a head fake of the descending wedge.
The textbook price target for the rising wedge is shown with the dotted line. In order for the price to reach this target, it must break through the support zone shown in pink. On the other hand, a failure to break this level would compromise the rising wedge breakout and signal a potential upwards breakout of the descending wedge.
The support zone is the current determining factor for the conclusion of the descending wedge. An upwards rebound would easily trigger a more sustained rally to test the underside of the primary uptrend. A downwards breakout from the support zone would cause the price to test the top of the secular trend. From that point, the analysis discussed in my last post predicts the price would fall further and test the bottom of the descending wedge.
Note
That support zone sure is tough. We might have another wack at it tomorrow. If not, it's time to rally.
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