Trading Edges That Last
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Lawrence’s Comment
NQ did a whiplash play. First NQ held Y-0 support and pushed higher above Y+1. That is pretty much the expected move. Then NQ failed to hold above Y+1 and slided back down. Instead of trading through the support zone, NQ gapped through the complete range and flushed down to Y-2 before finding support down there. Closed the week below Y-1 and near week low.
Outlook
As mentioned last week, the downside target is supposed to be Y-3. NQ refused to go lower by end of the week is a repeat of the pattern we have seen throughout this year. This will not produce a bottom at B-1. Instead it is creating an environment perfect for another drop down to Y-3 quickly.
This is the first significant pullback in NQ on weekly. Hence, unlike Dow or ES, NQ is the one with the best chance to find a bottom and rally back up to B-0 or even higher.
The sign for a short squeeze rally would be NQ flushing lower and recover quickly above B-1 on daily close basis. Once a reversal is in place NQ can zoom back up pretty quickly.
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