Short term
Trade view / 12 September 2016 at 7:21 GMT

Island reversal signals profit-taking pullback in NASDAQ

partner and technical analyst / 3 c analysis
United Kingdom

Four unchanged weekly closes in a row with the NASDAQ trading at 16 week highs has been a warning to bulls.

A daily island reversal at Wednesday’s peak has signalled the switch to bearish, though, and a third lower weekly low in a row is supporting this view. 

Along with this momentum and relative strength indicators are also pointing to a profit taking selloff.

Management and risk description

Allow room to sell the bounce and lower stop to entry if the first target is met.


Entry: sell at market and at 4744.5, the September 1 low.

Stop: 4792.5, Thursday's close.

Target: 4583.0, a 38% pullback to the June-September gains and 4517.0, the 10-week closing trade.

Time horizon: this week.

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Source: CQG

NASDAQ Weekly - pullback to gains
Source: CQG 

NASDAQ Quarterly - Bubble Top
Source: CQG 

— Edited by Michael McKenna

For more on equities click here.

Non-independent investment research disclaimer applies. Read more
13 September
Michael Liu Michael Liu
Hi Steve, do you still hold this position?
13 September
Steve Lucas Steve Lucas
Yes Michael - signals were pointing to a bounce, but yesterday's strength was more than anticipated tfs....
13 September
Michael Liu Michael Liu
OK, thanks for your reply.


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