Home Technical Analysis NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times –...

NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times – Chris Vermeulen (11/24/2020)

The NASDAQ E-Mini Futures (NQ) has rallied and stalled above 12,055, a 138.2% Fibonacci expansion of the December 2018 low range to the February 2019 (Pre-COVID-19) highs three times over the past 4 months.  We believe this resistance level, near 12,055, on the NQ is acting as a major price ceiling and may continue to prompt continued downside resistance as price attempts to break through this level.

NQ Fibonacci 1.382% Expansion May Turn Into A Major Top

The weekly NASDAQ E-Mini Futures chart, below, highlights the original price range and the current Fibonacci price expansion from the March 2020 COVID-19 lows.  We believe the sideways consolidation setting up on this NQ chart near the 1.382% Fibonacci expansion range suggests moderate price resistance exists near 12,055.  We also believe the three failed attempts to rally above this level represents a strong possibility of a major price peak setting up in the NQ unless recent high price levels are breached by a strong breakout/rally.

Whenever price failed to rally above resistance, as we are seeing on this chart, this support level becomes an even strong resistance level overall.  You will also likely notice the CYAN support channel near recent lows.  This level suggests a support channel is rising to create a FLAG formation – resulting in an APEX (breakout/breakdown) potential near the end of 2020.

My research team believes the end of year Christmas rally may be much weaker than expected after the big upside price rally post-COVID-19. We believe the uncertainty related to the political and global policies as well as the restrained consumer activity will likely prompt another round of broad market rotation and volatility over the next 4+ months. We believe trends will finally settle down near January/February 2021 – which will allow traders to really begin to take advantage of a broad market trend setting up.

This holiday season probably won’t be anything similar to the Christmas Rally modes we’ve seen in the recent past. We believe the resistance in the NQ near 12,055 will act as a price ceiling and prompt a downside price rotation with high volatility before the end of 2020.  This suggests traders should continue to prepare for big market rotations and higher volatility over the next 2 to 3+ months.

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Have a great week!

Chris Vermeulen
Chief Market Strategist

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