NASDAQ continued its rally yesterday and hit fresh highs around 12048 mark. The indice had managed to close marginally lower around 11837 mark, producing a Hanging Man candlestick pattern on the daily chart. Bears might be inclined to continue lower from here.
NASDAQ probable wave counts are as under: The indice had dropped through 6609 lows in March 2020. It might be seen as a larger degree Wave ((4)) termination (not labelled here). The subsequent rally has sub-divided into 5 waves, making an impulse and potentially terminated around 12048.
The rally between 6609 and 12048 could be the terminal Wave ((5)) at a larger degree. If the above proposed counts hold well, NASDAQ should resume lower from here anytime soon and continue towards its March 2020 lows at 6609 at least.
Immediate price support is seen through 11225, followed by 10854; while resistance is seen towards 12048 mark as of now. High probability remains for NASDAQ to produce an Evening Star bearish candlestick pattern, in 1-2 trading sessions.
Alternately, if the uptrend has to continue further the indice could drop through fibonacci 0.618 retracement, which is seen towards 8500/8700 levels. NASDAQ might produce a corrective drop at least towards the above mark, before finding support again.
Traders might remain flat for now and wait for a bearish signal to confirm a potential top at 12048 levels. A break below the rising trend line support would be constructive for bears as prices enter the sell zone. Watch out for a break below 11200 at least to confirm a potential top in place.
Technical Analysis Team
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