In today’s analysis, we focus on the NASDAQ, which began the week with a bearish gap but quickly initiated a reversal to the upside. While the index is experiencing high volatility and momentum, the big picture reveals a sideways trend that has persisted for several months.
The price has been trading within a pennant formation, defined by a dynamic resistance (upper blue line) and dynamic support (lower blue line). After multiple swings within this range, these key boundaries have become well-established. As long as the NASDAQ remains between these lines, no clear long-term trend is likely to emerge, leaving traders in a holding pattern.
The approach to trading this sideways trend is straightforward:
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Buy Signal: If the price breaks above the upper blue resistance, it will confirm a buy signal, signaling potential for further upside.
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Sell Signal: A reversal candlestick pattern (e.g., a shooting star or bearish engulfing) forming at the upper resistance would indicate a sell opportunity.
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Support Breakdown: A break below the lower blue support would activate a sell signal and likely initiate a bearish move.
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Bounce from Support: Conversely, a bullish candlestick pattern (e.g., hammer or bullish engulfing) near the lower support would offer a buy signal.
For now, the NASDAQ remains in this neutral zone, and traders should watch for either a breakout or reversal at the key levels to determine the next major move.