The QQQQ’s today managed to hold on to the edge of a cliff and by the close managed to sport a daily reversal hammer right on the symmetrical triangle lower supporting line.
This reversal hammer still needs confirmation the rest of this week and so if the implications are correct then there should be a bounce back inside the apex of the triangle the rest of this week.
The other market indices such as the sp500, DJIA, NYSE are not showing any triangle but instead still waterfall type patterns or descending triangles.
Despite today’s daily outcome I still do not trust today’s reversal and it may just be a one day fluke. I am also noticing today that volume is starting to pick up across the board and it could be that this extra volume is the signal that the initial stages of a break down out of the symmetrical and descending triangles is occurring.
Today’s daily reversal candlestick does not qualify as a long legged reversal hammer and even on the sp500 the actual hammer itself is questionable since the hammer body is too large. It is much better to see very small hammer bodies and very long candlestick ‘tails’.
No matter what I think, the triangle I pointed out in the QQQQ’s has the clearly defined parameters to work with. We did not exactly close back inside the triangle today so it is important that the QQQQ’s jump back inside that triangle soon otherwise the breakdown may gain some momentum later this week.