Nasdaq futures between bearish and bullish patterns

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By Kathy Garber

 

 

E-mini Nasdaq 100 (December)

The E-mini Nasdaq 100 (NQZ13) is between opposing emerging harmonic patterns. This is typical when price consolidates in some way, whether it be in a triangular formation where lower highs and higher lows occur, or sideways range movement. In this case both are happening: a triangular formation inside a sideways range. This is indicative of the instrument holding its breath; the cycle of contraction eventually evolves to expansion or breath exhale.

This particular opposing harmonic pattern scenario offers an either/or situation and the determining factor is based off either 3241.50 or 3198. So for the blue pattern, an emerging Bearish Butterfly or Crab, price is currently forming the 3rd of 4 legs and the requirement is a hold above 3198 for the validity of this Harmonic Pattern. If it breaches it by even a tick, it invalidates it. It is at this point that I look for price to hold below 3198 for a conservative short opportunity to complete the green emerging Bullish Bat harmonic pattern.

So a test and hold above 3198 OR failure to get there implies this particular leg for the blue pattern is complete and has the initial resistance test 3232.25. Above that is the ideal target, 3268.50, and scaling points 3241.50 (a line in the sand for the opposing emerging patterns) and 3253.25. This level is a completion of the Butterfly and has a probability of preventing the Crab from completing, but it is nice to have that target in case the bulls are a bit zealous.

This hour chart is RTH (regular trading hours) — it focuses on the price action during U.S. market hours. Using particular sessions like RTH or ETH (extended trading hours aka the Globex session) is a personal preference, just like everything else for a trader seeking the right strategy or style of trading.

So since the E-mini Nasdaq 100 (NQZ13) is currently forming a leg for either scenario, the 3198 is the current support that harmonic traders are focusing on because how price behaves there increases the probability of one or the other opposing pattern playing out.

I will be in the MrTopStep Trading Room today commenting on NQZ13 and letting members and our Boot Camp trial members know when and if I put on a trade. Come trade with us! Collective intelligence is greater than the sum of its parts.

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Posted In: Trading Ideas
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