Following last month’s rollercoaster ride for stocks and indices (as evidenced by the monthly candle) it’s no surprise to see markets come to a pause & trade in a narrow range, at least until Friday when we have some inflation data in the form of the CPI & Core CPI. Of the two the FED tends to pay more attention to the latter. The releases precede next week’s FOMC where the FED is expected to raise rates by a further half a percentage point.
From a technical perspective, it’s also no surprise to see the price action come to a halt given the resistance on the weekly chart which is both price based as denoted by the hatched blue lines created by the accumulation and distribution indicator. In addition, the price action is trading in a high volume node and just below the volume point of control which will also add its own weight as well as hamper any quick move higher. But the good news for the QQQ is the move higher was at least accompanied by some decent volume.
On the weekly chart we have a quartet of down candles breaking away from the volume point of control at the 320 region on rising volume at least on the first three but only average volume on the fourth signaling that perhaps the selling was coming to a halt and confirmed by the deep wick to the lower body suggesting a degree of buying. And whilst the subsequent bullish engulfing candle only has average volume if we overlay these two candles and create a two-week chart (see below) we have a nice hammer which was enough to stop the slide and reverse the index – at least to the resistance levels on the weekly chart.
Whether this is enough to take the reversal higher remains to be seen but the one element that will be required is volume and plenty of it. To the downside, the levels are the channel support at 304, followed by the S2 & S3 pivots at 299 and 295 respectively and thereafter a retest of this year’s low at 280.
By Anna Coulling
You can follow me on Twitter @annacoull as well as find my forex analysis at my Facebook page https://bit.ly/3Lp4URS
All the indicators on the chart are my own & available from Quantumtrading
Charts courtesy of Ninjatrader.
Leave a Reply