The end of the European session has brought a notable bullish upswing on the Nasdaq, one that signals a potential shift in market sentiment. This upswing is particularly significant as it has triggered a strong buy signal. Previously, the Nasdaq was in a bullish correction phase, forming a wedge pattern marked by green lines. Typically, such a wedge formation suggests a potential for further downside, promoting a breakout below the lower boundary and signaling a sell.
However, today we saw the price break above the upper line of this wedge, a clear display of market strength. Additionally, the price has also surpassed a key horizontal resistance level, marked in orange. With the price now above both of these critical levels, it suggests a strong buy signal.
That said, caution is warranted. Although the breakout appears promising, it’s important to wait for the day’s close. If the Nasdaq ends the day above these two resistances, it will confirm the buy signal. Conversely, if the price drops back down and closes the day below these levels, forming a long upper wick, it would indicate a false breakout and could serve as a strong sell signal.