Detailed Breakdown of NASDAQ (NAS100) 1H Chart
1. Wyckoff Distribution: Understanding the Phases
The Wyckoff Distribution model is essential for spotting market reversals. Here's a phase-by-phase breakdown of what's happening on the chart:
Phase A: Initial Consolidation
Preliminary Supply (PSY): The first sign that sellers are entering the market. A noticeable rally is slowing down, and buying momentum is weakening.
Automatic Reaction (AR): After reaching PSY, a sudden drop occurs as sellers take over, and the market establishes a new trading range.
Selling Climax (SC): This is where the heavy selling starts to slow down, but not without a significant price dip. SC often forms the bottom of the trading range.
Phase B: Distribution and Testing
Secondary Test (ST): After the AR, price revisits the upper bound of the range, but it doesn’t exceed the highs of the PSY. This forms a peak in the market that further confirms the range.
Sign of Weakness (SOW): Sellers begin to control the market, leading to a lower high or weak rallies within the range.
Upthrust (UT) in Phase B: The market attempts one final push above the established range, trying to trap buyers into believing that an upward breakout will occur. However, this rally fails, forming a Last Point of Supply (LPSY) at the peak of the market.
LPSY and Distribution Completion
LPSY (Last Point of Supply) is a clear signal of market exhaustion. The final upward test (UT) fails, and this typically triggers the start of a sharper decline.
After LPSY, the price starts heading downwards aggressively, signaling that the distribution phase is nearing completion and the market is ready to enter a markdown phase (bearish).
Key Wyckoff Levels in the Chart:
Resistance Level (BC Distribution): Around 19,962.5, marking the upper boundary of the range. This is the price level where the distribution occurred.
Support Level (AR Distribution): At 19,760.1, marking the lower boundary of the consolidation range. This is where buyers briefly took control before sellers resumed dominance.
2. Elliott Wave Analysis: Bearish Wave Count
The chart appears to be using Elliott Wave theory to predict the next market movement. The wave count indicates:
Wave Count Breakdown
Wave 1: An initial bearish impulse wave down, marking the first sign of a reversal.
Wave 2: A corrective move upward, likely reflecting an ABC pattern where price briefly retraces before continuing downward.
Wave 3: The next significant downward wave, usually the strongest and longest in an impulse wave pattern.
At this point, the market is expected to continue into Wave 4 and Wave 5 for further downside:
Wave 4: A smaller corrective move upward before the final push lower.
Wave 5: The final bearish wave, confirming the completion of the full Elliott wave cycle.
Invalidation Points in Elliott Wave
The Wave 4 invalidation point is highlighted at 19,322.9. If price retraces to this level or below, the current wave count will be invalidated, and the overall bearish structure will be reconsidered.
There is an invalidity threshold at 20,064.9 that indicates if price rises beyond this, the bearish Elliott wave count might be invalidated.
3. Fibonacci Levels: Key Retracement Points
The use of Fibonacci retracement levels is another layer to support potential reversal points in the market. Here’s the breakdown:
0.786 Fibonacci Retracement: Positioned at 20,007.6, this is a crucial resistance level. Typically, the 0.786 retracement level acts as a strong reversal zone, indicating that price is likely to reject this area and continue downward.
0.236 and 0.272 Fibonacci Levels: These represent short-term retracement levels. The market seems to have respected these levels in smaller corrective phases, indicating that minor pullbacks will likely occur around these levels before a deeper drop.
4. Harmonic Pattern: Potential Gartley or Bat Pattern
There is a harmonic pattern in play, likely a Gartley or Bat pattern. Here's the possible interpretation:
The 0.786 retracement level plays a key role here, acting as the pivotal level for the harmonic pattern completion. Typically, these patterns show a significant reversal upon completion, which aligns with the current price rejection at this zone.
This suggests a bearish continuation once the pattern is completed, reinforcing the Wyckoff and Elliott Wave analysis.
5. Other Key Market Levels and Indicators
POC (Point of Control): At 19,423.5, this marks a critical area where the most volume has been traded. Price action near the POC could act as a magnet, pulling price back towards this level for a retest.
W Close: Around 19,483.5, which may refer to a key weekly close level. These are typically significant for institutional traders and can act as support/resistance.
These levels, combined with volume, should be watched closely for signs of either a breakout or breakdown.
6. Future Price Movement Forecast
Based on the analysis of Wyckoff, Elliott Wave, and Fibonacci levels, the expected price movement is as follows:
Potential Rejection from LPSY and 0.786 Level: The price is likely to reject the 20,007.6 Fibonacci level and LPSY, marking the end of the upthrust and initiating a further decline.
Downward Elliott Wave Completion: After the rejection, the next bearish wave (Wave 3) is expected to continue, potentially targeting the 19,400-19,300 range. This would align with the SOW (Sign of Weakness) identified in Phase B of the Wyckoff structure.
Corrective Move (Wave 4): A minor upward correction could occur after Wave 3, targeting intermediate Fibonacci levels (0.236 or 0.272). However, this correction will likely be short-lived before continuing downward.
Final Push Down (Wave 5): The final wave should push prices lower toward the 19,322.9 invalidation point, completing the Elliott wave cycle and confirming the Wyckoff markdown phase.
Conclusion
The analysis across multiple methodologies points to a bearish outlook. The price is currently in a Wyckoff distribution phase, where a failure at the LPSY level and rejection from the 0.786 Fibonacci retracement indicates that further downside is expected. Elliott Wave theory supports this with a bearish wave count, targeting a continuation of downward price action after a short correction.
The Wyckoff Distribution model is essential for spotting market reversals. Here's a phase-by-phase breakdown of what's happening on the chart:
Phase A: Initial Consolidation
Preliminary Supply (PSY): The first sign that sellers are entering the market. A noticeable rally is slowing down, and buying momentum is weakening.
Automatic Reaction (AR): After reaching PSY, a sudden drop occurs as sellers take over, and the market establishes a new trading range.
Selling Climax (SC): This is where the heavy selling starts to slow down, but not without a significant price dip. SC often forms the bottom of the trading range.
Phase B: Distribution and Testing
Secondary Test (ST): After the AR, price revisits the upper bound of the range, but it doesn’t exceed the highs of the PSY. This forms a peak in the market that further confirms the range.
Sign of Weakness (SOW): Sellers begin to control the market, leading to a lower high or weak rallies within the range.
Upthrust (UT) in Phase B: The market attempts one final push above the established range, trying to trap buyers into believing that an upward breakout will occur. However, this rally fails, forming a Last Point of Supply (LPSY) at the peak of the market.
LPSY and Distribution Completion
LPSY (Last Point of Supply) is a clear signal of market exhaustion. The final upward test (UT) fails, and this typically triggers the start of a sharper decline.
After LPSY, the price starts heading downwards aggressively, signaling that the distribution phase is nearing completion and the market is ready to enter a markdown phase (bearish).
Key Wyckoff Levels in the Chart:
Resistance Level (BC Distribution): Around 19,962.5, marking the upper boundary of the range. This is the price level where the distribution occurred.
Support Level (AR Distribution): At 19,760.1, marking the lower boundary of the consolidation range. This is where buyers briefly took control before sellers resumed dominance.
2. Elliott Wave Analysis: Bearish Wave Count
The chart appears to be using Elliott Wave theory to predict the next market movement. The wave count indicates:
Wave Count Breakdown
Wave 1: An initial bearish impulse wave down, marking the first sign of a reversal.
Wave 2: A corrective move upward, likely reflecting an ABC pattern where price briefly retraces before continuing downward.
Wave 3: The next significant downward wave, usually the strongest and longest in an impulse wave pattern.
At this point, the market is expected to continue into Wave 4 and Wave 5 for further downside:
Wave 4: A smaller corrective move upward before the final push lower.
Wave 5: The final bearish wave, confirming the completion of the full Elliott wave cycle.
Invalidation Points in Elliott Wave
The Wave 4 invalidation point is highlighted at 19,322.9. If price retraces to this level or below, the current wave count will be invalidated, and the overall bearish structure will be reconsidered.
There is an invalidity threshold at 20,064.9 that indicates if price rises beyond this, the bearish Elliott wave count might be invalidated.
3. Fibonacci Levels: Key Retracement Points
The use of Fibonacci retracement levels is another layer to support potential reversal points in the market. Here’s the breakdown:
0.786 Fibonacci Retracement: Positioned at 20,007.6, this is a crucial resistance level. Typically, the 0.786 retracement level acts as a strong reversal zone, indicating that price is likely to reject this area and continue downward.
0.236 and 0.272 Fibonacci Levels: These represent short-term retracement levels. The market seems to have respected these levels in smaller corrective phases, indicating that minor pullbacks will likely occur around these levels before a deeper drop.
4. Harmonic Pattern: Potential Gartley or Bat Pattern
There is a harmonic pattern in play, likely a Gartley or Bat pattern. Here's the possible interpretation:
The 0.786 retracement level plays a key role here, acting as the pivotal level for the harmonic pattern completion. Typically, these patterns show a significant reversal upon completion, which aligns with the current price rejection at this zone.
This suggests a bearish continuation once the pattern is completed, reinforcing the Wyckoff and Elliott Wave analysis.
5. Other Key Market Levels and Indicators
POC (Point of Control): At 19,423.5, this marks a critical area where the most volume has been traded. Price action near the POC could act as a magnet, pulling price back towards this level for a retest.
W Close: Around 19,483.5, which may refer to a key weekly close level. These are typically significant for institutional traders and can act as support/resistance.
These levels, combined with volume, should be watched closely for signs of either a breakout or breakdown.
6. Future Price Movement Forecast
Based on the analysis of Wyckoff, Elliott Wave, and Fibonacci levels, the expected price movement is as follows:
Potential Rejection from LPSY and 0.786 Level: The price is likely to reject the 20,007.6 Fibonacci level and LPSY, marking the end of the upthrust and initiating a further decline.
Downward Elliott Wave Completion: After the rejection, the next bearish wave (Wave 3) is expected to continue, potentially targeting the 19,400-19,300 range. This would align with the SOW (Sign of Weakness) identified in Phase B of the Wyckoff structure.
Corrective Move (Wave 4): A minor upward correction could occur after Wave 3, targeting intermediate Fibonacci levels (0.236 or 0.272). However, this correction will likely be short-lived before continuing downward.
Final Push Down (Wave 5): The final wave should push prices lower toward the 19,322.9 invalidation point, completing the Elliott wave cycle and confirming the Wyckoff markdown phase.
Conclusion
The analysis across multiple methodologies points to a bearish outlook. The price is currently in a Wyckoff distribution phase, where a failure at the LPSY level and rejection from the 0.786 Fibonacci retracement indicates that further downside is expected. Elliott Wave theory supports this with a bearish wave count, targeting a continuation of downward price action after a short correction.
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