Is NASDAQ Forming Penultimate High?
Tom Pizzuti | Apr 28, 2021 02:10PM ET
We've been watching the e-mini Micro E-mini Nasdaq-100 Index Futures price as it forms what might be a completed structure up from the first week of March. This could mark the penultimate high in the long ascent from more than a decade ago.
Currently, NQ appears to be losing momentum after it's energetic climb from spring 2020. That would be consistent with an ending diagonal, which is a terminal pattern segment in Elliott wave analysis. Also we believe the internal structures of the swings since last November agree with the idea of an ending diagonal.
Referring to the weekly chart below, we're watching for a (i)-(ii)-(iii)-(iv)-(v) sequence up from March 2020. Zooming in on the price action since the completion of wave (iv) in November, we're looking for a smaller i-ii-iii-iv-v sequence that will comprise the final wave (v). Each wave inside that smaller sequence should consist of three sub-waves (not labeled on the weekly chart).
NQ price is now testing the Fibonacci-based resistance area at 14105, and the expected set of three sub-waves up from March 2021 appears complete. That suggests a retracement should begin soon as wave iv of the final sequence, with one more high expected in summer or autumn.
If NQ reverses from nearby, then watch for downward wave iv to reach for supports at 12921 or possibly 12657. Prior resistance at 13449 could also act as a "stepping stone" support along the way, perhaps marking the end of sub-wave [A] of iv.
On a larger scale, there's a good chance the expected high later this year will remain as a landmark on the chart for many years to come. In the same way we have been watching for sets of five waves to complete pattern segments on the weekly chart above, the long climb up from 2009 is approaching what should be the completion of a [i]-[ii]-[iii]-iv]-[v] sequence.
Big-picture resistance based on monthly candles resides nearby at 14088 and also at 15014. Typically, we watch the areas of big-picture resistance while fine-tuning our projections on faster charts, as with the weekly chart shown earlier.
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