Nasdaq Support Zone (Revision 1)

The Nasdaq (NQ) futures contract is currently range bound between 15708.75 and 15517.75 as shown on the 120M continuation chart. If prices can fall below this range BEFORE heading above it, then there’s a potential volume profile support cluster between 15384.00 and 15263.75. This zone shows the heaviest volume traded between the low on 8/19 until now. Further supporting this zone is the potential change of polarity (old resistance becomes new support) and double top target ~ 15384, the point of control ~ 15348, and the monthly pivot @ 15323.42.  I would look to be a buyer in this volume profile zone. Aggressive entries would be the top of the range (15384.00), moderate entries would be at the POC ~ 15346.75, and conservative entries would be at the middle of the zone ~ 15323.75. This pattern fails below 15235.00. Upside targets would be to scale out in the middle of the current range bound zone ~ 15608.50, the recent high @ 15699.00, and any remaining contracts to let ride with trailing stops. There are a few different products to make this trade. You could use Nasdaq e-mini futures, Nasdaq micro futures, or QQQ call options. Just make sure to use the Nasdaq futures chart for your trigger if you buy QQQ options. The pattern fails below 15235.00, so place any stops below that level.

Example trades:

Long NQ @ 15384, stop @ 15234.75, target 1 @ 15608.50, target 2 @ 15699.00

Risk = -2985.00, target 1 = +4490.00, target 2 @ +6300.00

Long MNQ @ 15384, stop @ 15234.75, target 1 @ 15608.50, target 2 @ 15699.00

Risk = -298.50, target 1 = +449.00, target 2 @ +630.00

Chart_21-09-07_09-11-36

Nasdaq Support Zone

The Nasdaq (NQ) futures contract is currently range bound between 15699.00 and 15517.75 as shown on the 120M continuation chart. If prices can fall below this range BEFORE heading above it, then there’s a potential volume profile support cluster between 15384.00 and 15263.75. This zone shows the heaviest volume traded between the low on 8/19 until now. Further supporting this zone is the monthly pivot @ 15323.42, the potential double top target ~ 15346.75 (also the point of control), and the potential change of polarity (old resistance becomes new support). I would look to be a buyer in this volume profile zone. Aggressive entries would be the top of the range (15384.00), moderate entries would be at the POC ~ 15346.75, and conservative entries would be at the middle of the zone ~ 15323.75. This pattern fails below 15235.00. Upside targets would be to scale out in the middle of the current range bound zone ~ 15608.50, the recent high @ 15699.00, and any remaining contracts to let ride with trailing stops. There are a few different products to make this trade. You could use Nasdaq e-mini futures, Nasdaq micro futures, or QQQ call options. Just make sure to use the Nasdaq futures chart for your trigger if you buy QQQ options. The pattern fails below 15235.00, so place any stops below that level.

Example trades:

Long NQ @ 15384, stop @ 15234.75, target 1 @ 15608.50, target 2 @ 15699.00

Risk = -2985.00, target 1 = +4490.00, target 2 @ +6300.00

Long MNQ @ 15384, stop @ 15234.75, target 1 @ 15608.50, target 2 @ 15699.00

Risk = -298.50, target 1 = +449.00, target 2 @ +630.00

Russell 2000 In Consolidation?

The Russell 2000 futures has been range bound for the past 6 months, as shown on its continuation chart. This range between 2366.00 on the high to 2084.40 on the low looks to be in consolidation.  The interesting thing is the large volume at price cluster that's developing between 2299.00 and 2199.00.  This cluster is currently the largest dating back to its March 2020 bottom.  Once prices break outside of this range, I expect this large volume cluster to serve as an import level of either support or resistance.  Let price action dictate the breakout direction and then look to enter positions on pullbacks into the volume cluster.

If we break below 2084.40 with a nice bearish candle, then I would look to short any pullbacks into the volume cluster.  If we break above 2366.00, then I would look to go long any pullbacks into the volume cluster.

I will be watching this market closely and will provide updates when warranted.

russell 2000

Mexican Peso: Possible Bullish Breakout (revision 1)

There is a potential bullish ABCD pattern, which closely resembles a flag pattern, developing in the Mexican Peso. This pattern is bullish because of the retracement, which is less than 50%. Anything less than 50% is bullish.  The trigger to this pattern is a break above .05025 before going below .04919. If prices can trigger this pattern before July 20th, then we would have right-handed skewing as well. The skewing shows the momentum, which in this case would be semi-strong. Weak momentum would be skewed to the left (i.e., less bars down to the swing low, and more bars to the breakout high).  The next step is to watch how price moves towards and above the breakout level on a smaller time frame (i.e. 240 min).  So far there are 2 ABCD patterns on this time frame.  Both have deeper than 50% retracements, which signals a weak up trend.  So we have some conflicting signals between the daily and intraday time frames.  These breakout patterns work best when both time frames are in sync.  However, the daily time frame does carry more weight.  Therefore, I anticipate a breakout on the daily time frame that will stall near recent highs (0.05074 to 0.05100).  Then I expect a pullback back below the breakout area.  This could offer a nice entry because there is a volume at price cluster developing as price action has been in potential accumulation mode the past few weeks.

Set-up 1:

Buy the breakout at 0.05026, with stops at 0.04918 for a risk of 540.00/futures contract.  The target of this ABCD pattern would be 0.05174 for a reward of 740.00/futures contract.

Set-up 2:

Don't buy the breakout.  Instead, wait for a potential pullback into the volume at price cluster.  This will lower your risk and increase your reward to risk ratio.  I will give more details on this trade in a follow-up post.  The stop and target would still be the same.

Lastly, we do have some possible upside obstacles that could serve as potential scale out levels before reaching the target zone. The first is between 0.05074 and 0.05100. This zone contains the swing highs from 12-9-20, 1-21-21, and 6-9-21. The next possible scale out would be 0.05123, which is July’s monthly R1 pivot.

Stay tuned for more analysis on this potential breakout.

mpeso

New Zealand Dollar Bearish Set-up

The New Zealand Dollar saw a 36.70% rally from it's March 2020 low into its February 2021 high.  However, this market has lost 6.9% since and is setting up for a potential downside breakout.  The daily continuation chart shows an ABCD pattern developing off its 5/26 high.  The retracement of this pattern is less than 50%, which is bearish.  A move below 0.6921 triggers the pattern.  If the pattern triggers tomorrow, then it will be 11:3 right-handed skewing.  Right-handed skewing signals strong momentum, while left-handed skewing signals weak momentum.  That's what makes this pattern so interesting; the combination of bearish retracement and potentially explosive momentum.  The pattern, once triggered, would be void above 0.7104.  The downside target would be 0.6708.

Momentum traders, who would take the breakout trade, would be risking 1850.00 per futures contract.  The reward would be 2120.00 per futures contract.  Pullback traders would look to get long somewhere inside the 0.6921 and 0.7104 area for a better reward-to-risk ratio.

Downside obstacles? The 120m chart shows a tiny abcd pattern on the leg down from the 7/6 high.  It has potential Fib support extensions at 0.6869, 0.6796, and 0.6723.  There's also a July monthly S1 pivot at 0.6840.  Finally, there's a July monthly S2 pivot just below the target at 0.6697.

Chart_21-07-08_16-03-55

One last thing worth mentioning is the bigger picture of this market, which is bullish.  A pullback down to the bearish ABCD pattern's objective would only represent a 38.20 retracement of the 2020 to 2021 rally.  Also, if we look at volume profile over the same time we see a larger volume cluster between 0.6683 and 0.6521.  This could present a potential BUYING opportunity.

To sum up:

Look for a break below 0.6921 within the next few days for a bearish breakout with strong downside momentum.  Play either the breakout OR wait for a possible pullback for a better entry.  The downside target is 0.6708, which is just above a larger volume cluster of support.  A potential long trade could present itself at that time.

Stay tuned!

 

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