NASDAQ seems to have carved a meaningful top around 11291 on August 07, 2020. The indice had dropped through 10854 levels since then, before pulling back higher towards 11274 levels. Bears are looking poised to turn lower again from here.NASDAQ probable wave counts since March 2020 lows around 6609 is as follows: The rally from 6609 through 11291 levels seem to have unfolded as an impulse wave, sub dividing into 5 waves. This rally was potential 5th wave at a larger degree.
Hence if NASDAQ has indeed terminated around 11291, it would be preparing to reverse and break below 6609 support. Under normal conditions, an impulse would be followed by a corrective drop. But since the impulse wave here is the last, the corrective wave would unfold at a larger degree.
Ideally, the first wave of the proposed larger degree correction should end around 6609, if the above structure holds well. A break below 10855 would confirm that a meaningful top is in place and that the indice has reversed lower.
Further, a break below 10316 would be considered more meaningful in terms of a potential trend reversal. Alternately, if prices break above 11291 levels, the upside could be limited hence would be better to avoid getting into a bull trap.
Traders might remain inclined to hold on to short positions with protective stops above 11300 and projected targets towards 6600 levels, over the next several weeks.
Technical Analysis Team
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