NASDAQ Broadening Top (D)
Created on Monday, 04 May 2015 01:15
Written by Austin Galt
The NASDAQ has reached its target being the all time high set in 2000 at 5132. Previous analysis in January 2015 outlined the expectation for price to come within 1-2% of that high and the recent high at 5119 looks perfect.
Let’s analyse the short term picture using the daily chart.
NASDAQ DAILY CHART
We can see the final stage of this bull market has set up a 5 point broadening top denoted by the numbers 1 to 5. Nice.
The final point 5 high was accompanied by bearish divergences in the lower indicators including the RSI, Stochastic, MACD and Momentum.
The Bollinger Bands show the recent high traded well above the upper band which is consistent with solid tops. Price has subsequently dropped back to the lower band before bouncing up to the middle band. After a little bit more work around this middle band I expect price to head back to the lower band as the downtrend picks up steam.
Price has just busted support from the PSAR indicator so the dots are now on the upside and represent resistance.
I have drawn a Fibonacci Fan which shows the point 3 high was at resistance from the 38.2% angle while the final move up into the point 5 high hugged the 61.8% angle before finally succumbing.
Keep in mind price has still not broken any previous swing low but I suspect that is just around the corner.
With a massive double top seemingly in place, I expect a big correction is now in its infancy and once confirmed we can look at potential levels for the move down to end.