In today's technical analysis, let's take a closer look at NASDAQ, which is showing signs of gearing up for a potential breakout to new highs. The recent price action suggests a bullish inclination, primarily due to the formation of an ascending triangle pattern—one of the most reliable technical indicators for upward momentum.
The ascending triangle is defined by a horizontal resistance level, which in this case, is the orange area around 20,320 points. This resistance was established at the end of September, and the price has since tested this level multiple times. Ascending triangles are generally considered bullish patterns, as they indicate that buyers are gradually gaining control, pushing the price toward the resistance level.
On the support side, NASDAQ is being propped up by two uptrend lines. The larger red uptrend line has been supporting the price over a longer period, indicating a steady upward trend since mid-year. There’s also a shorter black uptrend line, which forms a smaller ascending triangle within the larger one. These converging supports further reinforce the bullish sentiment, suggesting that the price is being squeezed upward, with a breakout to the upside becoming more likely.
If the price breaks above the orange resistance, we can expect a strong buy signal, which will likely propel NASDAQ to new highs. This scenario is supported by the ascending triangle formation, which typically resolves with an upward breakout.
However, as with any technical setup, it's important to consider the alternative view. If the price fails to break the orange resistance and instead breaks below the black uptrend line, we could see a short-term sell signal. In this case, the price may retreat toward the red uptrend line. While this would suggest a temporary correction, the long-term bullish sentiment would remain intact as long as the red uptrend line holds.