Both XLK and NAS100 have broken ‘left shoulder’ which means that both bearish reversal patterns are back in play. NAS100 still resembles a ‘Head and Shoulders pattern’ though XLK is more like ‘Broadening Top’. Wrote these 3 days ago.
So is NASDAQ going to do that ‘Head and Shoulders’ or not?
There is a chance but if I could tell with 100% certainty I would go all in. I am going to see whether the index crosses below the left shoulder or not. If it does, there is a good chance. If it does not then of course there is no way the head and shoulders will happen.
If Nasdaq does go below that left shoulder, there are 2 ETFs to look at: QQQ and XLK. QQQ chart looks a lot like NAS100 chart here but XLK is different. XLK actually printed a new 52-week high. However the same guide applies -> look at left shoulder. If XLK falls below, that 52-week high will be remembered as a bull trap.
Charts of XLK and NAS100 captured today.
XLK weekly chart
NAS100 (NASDAQ) weekly chart
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
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