Our research team has identified a potential trade setup in QID that correlates to our ongoing analysis of the US stock market and our Advanced Fibonacci Price Amplitude Arcs. We believe a major price inflection point is setting up in the US stock market within the next 48 hours that may prompt a price trend reversal in the NASDAQ and other major US stock market indexes. This pattern correlates to a much longer-term Head-n-Shoulders pattern that is also setting up in the SPY.
Our belief is that technical traders should wait for confirmation of this setup before entering any new trades, yet we believe we will have confirmation of this setup within 3 to 5 trading days – given the urgency of the setup with our Fibonacci Price Amplitude Arcs. We believe a right-shoulder could be forming as the US stock markets push a bit higher in early trading this week. We believe the Fibonacci Price Acr's are suggesting a major inflection point is preparing to disrupt price trends.
Just to be clear, this is a prediction, and as technical traders, we wait for confirmation before trading. This is the #1 issue with most traders. They jump the gun and buy into a trade idea before the price chart has confirmed and they lose a lot of money. Follow price, don' try to lead it.
If our analysis is correct, we may see a fairly strong trend reversal over the next 5+ trading days as this pattern/setup complete and confirm.
Daily QID (Inverse Nasdaq ETF) Chart
This Daily QID chart highlights the major RED Fibonacci Price Amplitude Arc that is setting up as well as the more narrow MAGENTA Arc. Both of these arcs are aligning very close to one another. Additionally, the RSI suggests any trend reversal to the upside could prompt a moderately large upside price trend.
NAS100 Daily Chart
This NAS100 Daily chart highlights the right-shoulder of a longer-term price pattern that we believe may be ending soon. If our analysis is correct, the right-side of the Head-n-Shoulders pattern may set up near the PURPLE Arc on this chart (or soon after) – prompting a broad downside price trend in the US stock market.
Longer-Term Weekly SPY chart
This longer-term Weekly SPY chart shows the Head-n-Shoulder setup that is forming in the SPY. Although the right side of the shoulder is rather short and volatile, we believe this setup may be a fairly strong potential pattern warning of a stronger downside price trend that may initiate soon. Obviously, 240 (previous lows) would be an easy objective in the SPY if this happens.
Current price levels suggest a resistance level has been reached. If this resistance level persists in containing price and creates a Head-n-Shoulders pattern, there is a very strong likelihood that a broader downside price move may present real opportunities for profits. Skilled traders should prepare for this potential and watch for confirmation of this pattern/setup.
Chief Market Strategist
Founder of Technical Traders Ltd.