Chart Chatter: $NDX

Welcome to Chart Chatter where we discuss various technical charts we find of interest. We cover indices, signals and stocks on different timeframes highlighting different technical techniques we use over time. We’ll focus on key observations we find relevant which readers may find of use for their own trading.

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In September we discussed this trend line chart on $NDX:

The context back then: “Note the current trend line proximity offered resistance in 2017 until it finally broke above in January 2018. The February 2018 correction appeared to break this trend line for good before finding support at the 3rd trend line. The trend line became resistance again in April and May, but has re-established itself as support again.

Given the frequency of tags of this trend line it is to be viewed with some caution in terms of its going forward reliability. However as of this writing it still offers support and may produce a rally.

Should price break this key trend line in context of the earlier chart downside risk into the next lower trend line opens up”.

We indeed saw another rally off of the trend line, but then it broke to the downside during this October correction. Last week $NDX hit precisely that lower trend line and it served as support and given other technical support confluence it offered a great long trade play opportunity:

Offering confluence support was also the quarterly 5 EMA:

And of course the long term trend line support zone:

What’s next?

The broken trend line outlined in September is now resistance as are key MA’s such as the 100MA and 50MA:

$NDX remains at risk of having a confirmed double top. The supporting trend lines on the daily and monthly charts are key for tech to hold or risk breaking the bull trend from 2009. The index can ill afford a break of last week’s lows and must find a way back above the 50MA in hurry to avoid that fate.

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