ONE44 Analytics where the analysis is concise and to the point
Our goal is to not only give you actionable information, but to help you understand why we think this is happening based on pure price analysis with Fibonacci retracements, that we believe are the underlying structure of all markets and Gann squares.
For the ONE44 Fibonacci rules and guidelines to help with this article, go here.
Charts are courtesy of Barchart.com
The chart below will help in following this post
We posted an article called "Signs of the NASDAQ 100 turning over" on 10/8/21. In it we mentioned that it was making lower highs and lower lows (not a good sign), however it had just hit 38.2% back to the 3/5/21 low, this was 14,370 and held the major Gann square at 14,466 and we said...
"Having hit 38.2% we will be looking for new highs for the move, as is expected when using the 38.2% rule, just as it was when it hit 23.6%. As we always say, we watch all the retracement on all moves to see just how strong, or weak the market is regardless of the longer term target.
The current rally is up against 38.2% to the ATH, provided this is all they can do, look for new lows for the move. Another sign of a trend change is when a smaller retracement in total price movement holds when coming from a much bigger retracement as is the 10/4/21 low."
The current rally to 38.2% just mentioned failed to make a new low on 10/11/21 and the new highs that we were expecting from 38.2% on 10/4/21 followed.
With the current top on 11/22/21 we have had some interesting things happen. First the break from the ATH held 15,670, 23.6% to the 3/5/21 low and the 15,622 major Gann square on 12/3/21, this should have led to new ATH's. The second key area was 78.6% back to the ATH, this was 16,520. It failed to get above this level on the first rally from 15,670 and the second attempt from it with the low made on 12/20/21 did hit it on 12/27/21. It had one close above it, but was right back below it the next day and this is what led to the current break.
As the ONE44 Fibonacci 78.6% rule states,
Any market that hits 78.6% should go 78.6% back the other way. This is also where a lot of Bull markets end and start.
The second part of this is yet to be determined and the overnight low will have a lot to do with it.
The overnight low held the 15,043 major Gann square, the 200 day moving average at 14,990 and 38.2% back to the 3/5/21 low at 15,000. Holding 38.2% at 15,000 should send it to a new ATH just as it did from the 10/4/21 low, however as always we watch all the retracements on every move to see just how weak, or strong the market is. The first key test on a rally from this area will be 38.2% back at 15,670 (this is the short term swing point), there is also a major Gann square at 15,622. Failing to get above this area would be a negative sign after holding a 38.2% retracement from a much bigger range, provided they can get above it, look for the 16,274 major Gann square and 78.6% at 16,320.
Taking out 15,000 should mean a longer term top is in and if so, our long term target area will be 13,060 to 12,870, this is 23.6% back to the 2008 low, 38.2% back to the 2020 low and a major Gann square.
If you are looking for option plays to go with the ONE44 levels, we highly recommend going to the Barchart webinar library where John Rowland has plenty of information on Option strategies.
Sign up for our Free newsletter here.
FULL RISK DISCLOSURE: Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Commission Rule 4.41(b)(1)(I) hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Past performance is not necessarily indicative of future results.