This is the chart of the NDX that we looked at in the August 23 post, "NDX: The New Bull Market." The Bears got trapped on the false breakdown of the Ascending Triangle, and the pattern just had broken out to the upside, putting 1678.54 IN PLAY.
The Ascending Triangle (dotted lines in this chart) appears to have morphed into a Bear Flag/Rising Channel, but the upside target got MADE last Thursday. Given the big Lead-in rally off the July 8 low, this pattern in black also takes on the look of a Bearish Wolfe Wave, although the symmetry between Waves #1-2 and Waves #3-#4 seems a bit lacking.
As we know the key to a good Wolfe Wave is a Wave 5 Fakeout/Breakout to the upside, putting the proverbial everyone wrong-footed, followed by a reversal that breaks trendline #2-#4. We got the upside breakout on Thursday, which held on Friday by about two points.
Bear Flags/Rising Channels aren't always bearish. The NDX has been in a bull market for ten months come next Monday and has hit all of its marks on the upside, so that needs to be taken into account. The Bears have not respected the trend, and have been punished for it. At the moment, the NDX is in another upside technical breakout, so the onus once again is on The Bears. They need to close the NDX back inside the Bear Flag/Rising Channel pattern, and then take out trendline #2-4.
As long as the NDX trades above the pattern, 1786.23 is IN PLAY.
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