Fibonacci, Bats and Waves Point Much Higher for the Nasdaq
- Posted by Greg Harmon
- on July 24th, 2014
The longer term view of the Nasdaq 100 ETF, $QQQ, is really strong. And despite the math involved it is a really easy chart to interpret. Take a look.
When you bring up the topic of Harmonic patterns or Elliott Wave principle at the dinner table or even a gathering of market technicians eyes start to glaze over. But the pictorial view is really simple to interpret. First, both are built on the back of Fibonacci ratios, discovered nearly 1000 years ago. It was noted that these ratios not only draw really cool patterns, but can be used to describe nature and the actual Fibonacci numbers themselves appear in nature everywhere. But I digress. Just take it that Harmonics and Elliott Wave are based on observed science and not just made up.
When applying them to the monthly chart of the QQQ a simple analysis shows a Harmonic Bat that has a Potential Reversal Zone at about 110. Translation: from prior patterns the current leg could go to 110 if the pattern holds. Now looking at Elliott Wave, the 5 wave impulse series seems to have started at point A following the dot com crash. The first retracement wave #2 was deep, which in Elliot Wave terms suggests that the next one will be flat. The major Wave #3 that is in process could certainly end at point D, which would be about 238.2% of the first Wave (a Fibonacci extension). A flat corrective wave #4 from there and then Wave #5 higher to complete the impulse could see 140 or more.
Not as complicated as it seems. But these patterns on longer charts can help drown out some of the day to day noise.
Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through July 2014 Expiry and sign up here
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- The mosaic of Intel points higher
- Top Trade Ideas for the Week November 30, 2015: Bonus Idea
- Top Trade Ideas for the Week of November 30, 2015: The Rest
- Top Trade Ideas for the Week of November 30, 2015: The Rest Premium
- Top Trade Ideas for the Week of November 30, 2015: The Best
- SPY Trends and Influencers November 28, 2015
- Macro Posts This Past Week
- Macro Week in Review/Preview November 27, 2015
- How this Week’s Top 10 Performed, November 27, 2015
- Black Friday Sale on Gold