60 minute time frame:
- NDX has carved out a potential reversal pattern (Rising Wedge)
- If the lower trend line of the assumed Rising Wedge is breached the wave (v) would have truncated
- Given the size of the Rising Wedge, if it plays out, odds should favor a penetration of the S2 = 4435
- If this is the case price could be heading towards the gap fill at 4287
- The negative divergence of the hourly RSI strengthen the bearish pattern
- Hence I am looking to implement a long setup in SQQQ (3 x Short QQQ ETF)
Daily time frame:
- Today's Doji, with the rebound off the 10 dma, is suggesting that the wedge is probably not done yet
- Once the wedge is done we have three critical support layers to be watched for a potential bottom: S1 = 200 DMA; S2 = 50 dma; S3 = Gap fill at 4287
- During the assumed pullback I do expect a higher low.
- The RSI (14) is displaying a negative divergence. The loss of the trend line would confirm the reversal Pattern
- The MACD so far has a new bearish signal cross
- Since the beginning of April NDX is showing relative weakness versus SPY
Therefore I think it is worthwhile to be prepared to open a long position in SQQQ ( 3 x Short QQQ ETF) if above 17.93 with an initial target T1 in the range of the 50 dma = 20.61 - Gap fill = 21.25
