QQQ Bearish Scenario - 422 Short Term Target
The price action momentum over the last month or so in the QQQ has begun to slow down.
Price within the main black bull channel seems to have shifted into a more shallow (blue) bull channel, which is a sign of slowing momentum.
This shift into the blue channel gives better chances that the bears could take control if the black channel is lost by the bulls.
A bearish scenario i will be watching is if they break below the 435 area, price will likely be breaking down from both the main black bull channel, and the blue tapering channel.
With this setup, overall i would like to see some sort of right shoulder to form to build liquidity to take it lower.
The next (blue tapering) lower channel line should be around 431, and another pause and right shoulder there would be good to see.
If they can break the 2nd tapering channel line at 431, they should have room to about 422 area, to test the recent gap and pivot, which was the day of NVDA's earnings.
Price within the main black bull channel seems to have shifted into a more shallow (blue) bull channel, which is a sign of slowing momentum.
This shift into the blue channel gives better chances that the bears could take control if the black channel is lost by the bulls.
A bearish scenario i will be watching is if they break below the 435 area, price will likely be breaking down from both the main black bull channel, and the blue tapering channel.
With this setup, overall i would like to see some sort of right shoulder to form to build liquidity to take it lower.
The next (blue tapering) lower channel line should be around 431, and another pause and right shoulder there would be good to see.
If they can break the 2nd tapering channel line at 431, they should have room to about 422 area, to test the recent gap and pivot, which was the day of NVDA's earnings.
Trade active:
QQQ seems to be following along with this idea for downside to the 420-422 area.
Opened 4/22 425 puts on Friday 3/15.
Last week they built a right shoulder and then just started to break down and hold below the 435 area. Structurally important is that its getting below the black main bull channel line, and the blue slowing momentum channel line. This intersection of the 2 channels i think will allow the bears to actually break down out of the main black bull channel.
The bears need to see a continued move to the next blue channel line to about 430 area, and ideally they build some liquidity as some sort of right shoulder there, before breaking down to the 420-422 area.
One thing that aligns with this bearish idea is that OpEx (Triple Witching) was on Friday, and this 'gamma release' of all of the quarterly contracts may be the thing that actually allows the market to come in a bit.
Not calling the top, not looking for a big correction, just this pullback to the 420-422 gap area which was formed the day of NVDA recent earnings.
Opened 4/22 425 puts on Friday 3/15.
Last week they built a right shoulder and then just started to break down and hold below the 435 area. Structurally important is that its getting below the black main bull channel line, and the blue slowing momentum channel line. This intersection of the 2 channels i think will allow the bears to actually break down out of the main black bull channel.
The bears need to see a continued move to the next blue channel line to about 430 area, and ideally they build some liquidity as some sort of right shoulder there, before breaking down to the 420-422 area.
One thing that aligns with this bearish idea is that OpEx (Triple Witching) was on Friday, and this 'gamma release' of all of the quarterly contracts may be the thing that actually allows the market to come in a bit.
Not calling the top, not looking for a big correction, just this pullback to the 420-422 gap area which was formed the day of NVDA recent earnings.
Trade closed: stop reached:
This trade stopped working into the FOMC meeting on 3/20/24.
No rate change as expected, but the market wanted to see the updated SEP dot plot. The data suggested that there could still be 3 rate cuts this year, and the market rallied.
Stopped out of my put position and the trade is closed.
They have gotten back up into the main black bull channel for now.
I will still be watching this blue channel for signs of tapering and slowing momentum.
Onward and upward.
No rate change as expected, but the market wanted to see the updated SEP dot plot. The data suggested that there could still be 3 rate cuts this year, and the market rallied.
Stopped out of my put position and the trade is closed.
They have gotten back up into the main black bull channel for now.
I will still be watching this blue channel for signs of tapering and slowing momentum.
Onward and upward.