There is nothing bearish about what is happening on the long-term $NQ charts. While my daytrading setups focus on much shorter term charts, I always like to have an idea about where the bigger trend is pointing. Since the weekly chart really stands out to me, I decided to focus this weekends post this chart.
One of the most bullish patterns in techncial analysis is the cup and handle. Any real trader or investor has no doubt heard of and followed the teachings of William O'Neil at one point or another. He is the founder of the CAN SLIM method of investing and creator of Investor's Business Daily. I have been a long-term subscriber and used to love getting the paper version delivered to my house before everything pretty much went online. There was something about looking at all those charts every week and reading the articles in the paper format that I really looked forward to and enjoyed. Not sure anyone that has grown up in the age of the internet will ever really appreciate opening a fresh paper! For any followers you'll know that a chart pattern of focus in his system is the cup and handle and the focus on buying the breakout. We currently have a huge cup and handle that can be clearly seen on the weekly chart. This is a continuation pattern where the target for the move is measured from the bottom of the cup (around 10,600 marked with an "A" on the chart) to the top of where the handle starts to form (around 16,100 marked with a "B" on the chart). This gives us a difference of 5,500 total points which would be the target for the move which is then measured from the breakout indicated on the chart as point "C" around 15,500. This would suggest a move to 21,000! Now, I am not suggesting this is going to happen easily or even happen at all. This could/should easily take 2-3 years based on how long the timeframe is we are looking at and the fact it has taken the cup and handle this long to form. Click here to read a bit more on the pattern at Stockcharts.com.
In my trading for the week, I am leaning bullish. It is hard to fight the longer term trend and the path of least resistence seems up right now. That said, I'll take what the market gives me each day and try to maintain an unbiased opinion. Just trade the chart in front of me!
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