{"id":174106,"date":"2020-07-27T20:35:44","date_gmt":"2020-07-28T00:35:44","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=174106"},"modified":"2020-07-27T20:35:44","modified_gmt":"2020-07-28T00:35:44","slug":"nasdaq-double-top-price-channels-suggest-pending-price-correction","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/07\/nasdaq-double-top-price-channels-suggest-pending-price-correction\/","title":{"rendered":"NASDAQ Double Top & Price Channels Suggest Pending Price Correction"},"content":{"rendered":"
July 27, 2020<\/div>
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By TheTechnicalTraders<\/u><\/a>\u00a0<\/strong><\/p>\n

– Our research team continues to attempt to navigate the difficult market dynamics ahead as traders\u2019 concerns related to continued global economic functions persist.\u00a0 We believe the US stock market has rallied well beyond sustainable levels and the recent move in the US Dollar and Precious Metals has issued a clear warning that global traders are not buying into the current valuation levels of the major indexes.\u00a0 The NASDAQ (NQ) has rallied to new all-time highs at a time when a majority of the US Stock Market is contracting and concerns about future earnings\/revenues continue to shock investors.\u00a0 It is almost as if a large group of traders piled into the \u201cFed Recovery\u201d message and ignored the fact that the COVID-19 virus event is vastly different than any other price correction we\u2019ve experienced over the past 40+ years.<\/p>\n

NQ DOUBLE TOP SETUP<\/strong><\/h3>\n

Recently, the NQ setup a very clear Double Top pattern near a somewhat obscure Fibonacci level (85.4%).\u00a0 The Double Top pattern is a common technical pattern that suggests a resistance has formed near the Double Top price level, near 11058.50. Next week, critical GDP data and economic data will be announced on Thursday, July 30.\u00a0 We believe the move in Gold and Silver is foreshadowing an ominous series of data that will reflect a very clear 20% to 30%+ contraction in the US and global economy.\u00a0 The Double Top pattern in the NQ could be a very strong warning that the FOMO (Fear Of Missing Out) rally may be over.<\/p>\n

NASDAQ DAILY CHART<\/strong><\/h4>\n
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NQ 100% MEASURED MOVE SETUP<\/strong><\/h3>\n

This NQ Weekly chart highlights the nearly 3,950 point rally from the low in December 2018 to the high formed on February 17, 2020.\u00a0 The current low formed in March 2020, near 6628, to the recent peak level, near 11,085, represents a \u201c100% measured price advance\u201d of 4,430 points.\u00a0 Yes, the current rally extended the 100% measured move by 12.15% \u2013 which often happens as price tests resistance or support. Measuring from Weekly closing bar to Weekly closing bar on this chart, the 100% measured move is only about 50 points away from a true 100% advance.<\/p>\n

NASDAQ WEEKLY CHART<\/h4>\n
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We believe this combination of technical price patterns suggests the US stock market, particularly the high-flying NASDAQ (NQ), may be setting up for a dramatic price decline.\u00a0 Both the Double Top and 100% Measured Move patterns suggest price has reached a limit.\u00a0 If our interpretation of these technical patterns is correct, after such an incredible price rally in the face of unsure future economic data, we believe a move back to 8,750 is not out of the question (or lower).<\/p>\n

Before you continue, be sure to\u00a0opt-in to our free market trend signals<\/strong><\/a>\u00a0<\/em>
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NQ FIBONACCI CHANNELS<\/strong><\/h3>\n

Very few people understand the relationship of Fibonacci price theory and how it relates to price action.\u00a0 Fibonacci Price Theory suggests that price must move higher or lower to establish new price highs or lows within a trend.\u00a0 Obviously, the NQ has rallied to \u201cnew price highs\u201d \u2013 thus the current trend is \u201cbullish\u201d.\u00a0 Yet, a Double Top pattern is also a critical warning of resistance near the dual top level.\u00a0 Additionally, a 100% measured price advance is another warning sign that price may have reached an upside limit.\u00a0 Now, we add our proprietary Fibonacci Price Amplitude Arcs using a 0.854% Fibonacci extension level.<\/p>\n

This extension level is not commonly used by many traders but is completely valid if you spend a bit of time exploring the Fibonacci Number Sequence and the relationship between the numbers.\u00a0 In fact, there are a number of levels between the 0.75% and 1.0% common Fibonacci levels that are valid for traders.<\/p>\n

We have drawn the 1.854% Fibonacci Price Amplitude Arc in a MEGENTA color to highlight just how critical this level appears on the Weekly price chart.\u00a0 If our research is correct, we now have three technical\/Fibonacci patterns that are setting up warning us that the NQ price may turn downward and begin a new downside price rotation.\u00a0 When we combine this with the data that we are expecting this week (GDP, Consumer and other data), this could turn into a \u201cknockout blow\u201d for the high-flying NASDAQ.<\/p>\n

NASDAQ DAILY \u2013 FIBONACCI CHANNELS<\/h4>\n
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If you were paying attention, you already know that the US Dollar is under pressure and the Precious Metals are showing signs that fear is rising in the global markets.\u00a0 This next week, and the weeks that follow, will likely result in global traders attempting to re-valuate expectations based on the level of destruction the COVID-19 virus has done to the US and global economy.<\/p>\n

Our researchers expect a minimum of a 20% to 25% contraction in consumer and business engagement in the US \u2013 possibly much more.\u00a0 In March 2020, our research team suggested the Q1 and Q2 GDP data could contract by as much as -10% to -15%, potentially pushing the 2020 yearly GDP level into a -5% or deeper level<\/a>.<\/a>\u00a0 On Thursday, July 30, 2020, we\u2019ll find out just how rough Q2 of 2020 really was for the US.<\/p>\n

This is when the crap is likely to stick to the walls, so our advice would be to protect your open longs, prepare for increased volatility and don\u2019t get married to any position you have right now.\u00a0 If you have not already prepared for this move, do it quickly early this week.<\/p>\n

If the news is bad enough, there is no reason why the US and global markets could not attempt to retest recent low-price levels again.\u00a0 Remember, Fibonacci Price Theory suggests price is ALWAYS seeking new price highs or new price lows.\u00a0 Just because the NQ has reached new price high levels does not mean the S&P500, Dow Jones or other indexes, which have not reached new all-time highs, could not collapse and attempt to find new price low levels.<\/p>\n

Get our\u00a0Active ETF Swing Trade Signals<\/strong><\/a>\u00a0or if you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my\u00a0Passive Long-Term ETF Investing Signals<\/a><\/strong>\u00a0which we are about to issue a new signal for subscribers.<\/p>\n

Chris Vermeulen
\nChief Market Strategist
\nFounder of Technical Traders Ltd.<\/p>\n

NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.\u00a0 It is provided for research and educational purposes only.\u00a0 The Technical Traders Ltd. does not provide financial or investment advice, so please contact your financial advisor before making decisions about your personal finances.<\/em><\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders\u00a0 – Our research team continues to attempt to navigate the difficult market dynamics ahead as traders\u2019 concerns related to continued global economic functions persist.\u00a0 We believe the US stock market has rallied well beyond sustainable levels and the recent move in the US Dollar and Precious Metals has issued a clear warning that […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-174106","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/174106","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=174106"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/174106\/revisions"}],"predecessor-version":[{"id":174110,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/174106\/revisions\/174110"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=174106"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=174106"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=174106"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}