Michele Schneider | Apr 24, 2022 02:42AM ET
After both the Russell 2000 (IWM) and the NASDAQ 100 (QQQ) failed to hold or clear over the 50-Day moving average (blue line), the bleeding has not stopped.
Now that IWM and many key ETFs are near the bottom of their trading range, how should we prepare for next week?
Because we are in a stagflation type of environment with weak market growth and rising inflation, we need to be extra careful with how we trade.
This led us to believe that trading ranges would give us important areas to watch for entries to the long and short side.
As seen in the above chart IWM, and QQQ have been rangebound for some time. Range highs and lows are shown with black lines.
However, we can extend watching ranges to other key symbols such as the transportation (IYT), retail (XRT), and biotech (IBB) ETFs.
When looking at Monday’s trading session, this can help show if we should watch for a bounce near support from the range low or watch for the market to continue breaking down.
If only a couple of symbols break the range low, the weak price action could show that the market is looking to bounce. On the other hand, if the ETFs break lower in unison, we could expect another leg down in the market.
Currently, many traders are watching the market from a bearish standpoint. While this can be helpful at times, it can also be frustrating if the market decides to trend sideways or stay rangebound.
Therefore, keep an eye on ranges in these symbols along with anything you are currently watching for trade setups in.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.