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TECHNICAL ANALYSIS


Technology Tapped

08/31/09 09:18:58 AM
by Austin Passamonte

Here's the near-term market outlook for NASDAQ 100.

Security:   NQ
Position:   N/A

The last time we looked at NQ futures charts, price action was consolidating just below key price magnets of attraction. There was an open gap from October 2008 and Fibonacci projections layered within that gap beckoned to price (Figure 1).

FIGURE 1: NQ, WEEKLY
Graphic provided by: TradeStation.
 
Indeed, we found that meshed attraction of price magnets attractive. The uptrend week prior to this culminated with a gap fill and test of the overhead zone. Mission accomplished, in spinning doji candle fashion. Now what?

FIGURE 2: NQ, DAILY
Graphic provided by: TradeStation.
 
The daily chart view (Figure 2) shows an ascending trendline that was tapped & held again to end this week. An open gap roughly -100 index points below is a visible target that will surely fill sooner or later. The open gap from early October 2008 took nearly one year to fill, but fill it did. Likewise was the one still below, perhaps sooner than later, relative to that now filled.

A bullish hammer candle from Thursday, August 27, was followed by a bearish stall at key resistance the next day. This is fundamentally a very quiet period in the markets, but anything is possible. Continued sideways coiling and price testing near this critical zone is probable. A directional push higher or lower will obviously happen eventually, though it might have to wait until the post-Labor Day period.

The tech sector has led the 2009 rally from March lows all the way up. It may be the last to fail, but will surely play catchup if failure happens. Watching this one lead higher or lag lower has been the cue so far. Price is now at key levels of long-term attraction, poised to react sharply soon from there.



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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