NASDAQ, NDX / QQQ, has been leading the stock market rally. In my opinion, we don't need to take any other chart / index into consideration when looking at the trend of the stock market. We recently reached the top of a large pattern that goes back to 2018. I mentioned in a previous idea that the price is likely to find resistance on the top line, and it did.
Everyone needs to be mindful that long term investors see this exact same pattern which is what makes it so effective to trade. In terms of probability, price is likely to be contained within these two lines until the market breaks out of this pattern. If it does, overbought becomes oversold. For instance, if NASDAQ breaks out of the top of this pattern and holds, then the price is no longer overbought, it becomes oversold and may never visit this structure again. In other words, the top of this pattern becomes the new bottom (support). The opposite is true if price breaks and holds the bottom of the pattern, although less likely as Nasdaq pretty much only goes up when looking at the monthly chart. I would buy with both hands if the price reaches the bottom trend line again, but it may never reach it again if the price breaks out of the top of the pattern and holds.
Today, Nasdaq has tested the previous all time high which made it an amazing point of entry for longs. If this holds, we may see the price test the upper trend line and/or break above it and hold. If this new high doesn't hold, we may see price revisit the bottom trend line, although it's hard to fathom the fed letting this happen seeing as how they're willing to do everything they can to keep the trend upwards.
As a side note, I believe everyone needs to quit with their bias. I have been reading multiple forums, reddit, and tradingview chat and I cannot believe how many people's minds are clouded by their emotions / feelings on which way the market should go. Some people refuse to buy any point of this rally, even with a stop loss, out of principle and strong belief that the market is manipulated. Yes the market is manipulated, and it always has been, and it's likely more manipulated now more than ever, and in 10 more years, according to the trend it will be even more manipulated than it is today. However, are you willing to lose money to protect your ego? Do you put your ego ahead of those you provide for? We're traders, not psychics, no one knows with any certainty which way the market is going, we can only think in terms of probabilities and set our targets and stop losses accordingly. We should never trade based on what we think SHOULD be fair. Life is not fair, nothing is fair, and for those of us who have not dealt with that reality, it's never to late to deal with it and trade what's in front of us.
If you suffer from a strong bias, it's time to quit reading the news and to make yourself a big reminder that you only need to trade the chart, and that means trading with the trend WITH a stop loss.
How do I see the trend? Bullish, obviously, but with a defined ceiling and floor of a pattern that is facing upwards - this is what is in front of me. This ceiling and floor will continue to define the the trend until price breaks out of it.
To those of you who cannot break a bias that keeps you from effectively trading the chart, it might be best to trade something you absolutely know nothing about and don't care about. Doing this will help you trade the chart, not your emotions or bias.
If this helped you in any way, please upvote and follow. This will encourage me to create similar ideas.
Everyone needs to be mindful that long term investors see this exact same pattern which is what makes it so effective to trade. In terms of probability, price is likely to be contained within these two lines until the market breaks out of this pattern. If it does, overbought becomes oversold. For instance, if NASDAQ breaks out of the top of this pattern and holds, then the price is no longer overbought, it becomes oversold and may never visit this structure again. In other words, the top of this pattern becomes the new bottom (support). The opposite is true if price breaks and holds the bottom of the pattern, although less likely as Nasdaq pretty much only goes up when looking at the monthly chart. I would buy with both hands if the price reaches the bottom trend line again, but it may never reach it again if the price breaks out of the top of the pattern and holds.
Today, Nasdaq has tested the previous all time high which made it an amazing point of entry for longs. If this holds, we may see the price test the upper trend line and/or break above it and hold. If this new high doesn't hold, we may see price revisit the bottom trend line, although it's hard to fathom the fed letting this happen seeing as how they're willing to do everything they can to keep the trend upwards.
As a side note, I believe everyone needs to quit with their bias. I have been reading multiple forums, reddit, and tradingview chat and I cannot believe how many people's minds are clouded by their emotions / feelings on which way the market should go. Some people refuse to buy any point of this rally, even with a stop loss, out of principle and strong belief that the market is manipulated. Yes the market is manipulated, and it always has been, and it's likely more manipulated now more than ever, and in 10 more years, according to the trend it will be even more manipulated than it is today. However, are you willing to lose money to protect your ego? Do you put your ego ahead of those you provide for? We're traders, not psychics, no one knows with any certainty which way the market is going, we can only think in terms of probabilities and set our targets and stop losses accordingly. We should never trade based on what we think SHOULD be fair. Life is not fair, nothing is fair, and for those of us who have not dealt with that reality, it's never to late to deal with it and trade what's in front of us.
If you suffer from a strong bias, it's time to quit reading the news and to make yourself a big reminder that you only need to trade the chart, and that means trading with the trend WITH a stop loss.
How do I see the trend? Bullish, obviously, but with a defined ceiling and floor of a pattern that is facing upwards - this is what is in front of me. This ceiling and floor will continue to define the the trend until price breaks out of it.
To those of you who cannot break a bias that keeps you from effectively trading the chart, it might be best to trade something you absolutely know nothing about and don't care about. Doing this will help you trade the chart, not your emotions or bias.
If this helped you in any way, please upvote and follow. This will encourage me to create similar ideas.
Comment:
I added a 2nd part to this idea better showing the bull case - a possible parabolic surge, which you can find here:
My goal is to find the best risk:reward setups. For instance, if you risk $1,000 at a chance to make $5,000, you can afford to be wrong 4 out of 5 times and still not lose money. I hit my targets over 50% of the time.
I agree, it's a scam. Scammy scam scam. I'll scream this into my pillow and take some pills to deal with my PTSD. Doesn't matter how I feel, I'm wrong half the time anyway and I'm not afraid to admit it. That's why risk reward is so important. I think most people are wrong half the time as well but their ego stops them from realizing this. Trade the chart and probabilities where risk:reward is in your favor regardless of your opinion!