(Click On Chart To Enlarge)
Reversal #1: The November 6 little black candle (circled in red) was a Buy Pivot in my work. When a signal is given, it's up to the individual technician whether they like the chart well enough to take action on the signal. It's a Buy if the 1676.92 high gets taken out to the upside. Stop: 1603.87. and we can see from the horizontal black line how "pivotal" that Buy Signal was, and still is.
November 8, the high was 1680.67, triggering the Buy Signal, but it turned out to be a "Gap To Crap" candle that only served to fill the 1679.19 gap from November 4, then the index reversed and printed a low of 1603.33, which technically triggered the stop. Some technicians will wait for a CLOSE below the stop. That came the next day, officially triggering the stop, and indicating a return to the bottom of the channel.
Reversal #2: Two days later, the bottom of the channel was tested. It held, validating it as support, and the day finished on very bullish Key Reversal candle. The close was on the high, at 1596.70, just below 1603.87, which now "should be" resistance since that was the low of the November 6 pivot candle. But...we've got a Bullish Key Reversal!
Reversal #3: The Bullish Key Reversal turned out to be a HUGE Bull Trap. 1603.87 did turn out to be resistance, and the "not so Bullish Reversal" got reversed. The Nasdaq went into a severe drop of 300 points over the next six sessions, broke below the channel, and CLOSED below the channel, indicating that the Nasdaq was headed lower.
Reversal #4: Not so fast! LOL. The downside reversal got reversed on November 21, and look at the action since then, with respect to the "pivotal" 1603.87. The high for the move is the December 9 high is 1602.97. The Nasdaq has come out the other side of the channel, but the subsequent highs have been just under 1600.
Summary: The Nasdaq begins Christmas week with DOUBLE support today at 1538-1541 (listed at the upper right on the chart). An upside takeout of 1603.87 "should" produce a rally at least to the November 10 "scene of the crime" (the false Buy Signal), at 1679-1680 resistance.
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