When viewing the 3 line break chart for the Nasdaq Summation there are some very clear areas of support and resistance forming. The 500 level is an area of resistance defined by two different converging trendlines and should this index make it back up that high, it could find itself struggling to move higher.
On the opposite side we have this index recently bounce off the lower trend line last week after printing a bullish white candle. In theory, that in itself is a buy signal when it takes out the previous 3 red candles, and the fact that it’s a higher low is a bullish sign. The longer trendline from the July ’10 lows has support near 150.
Another bearish sign is the 13/34 moving average crossover has recently crossed, suggesting we’re in entering a bearish time. If this index can string a few more white candles together, these moving averages could flip again, setting up a showdown at the 500 level, which could be a top in the markets in general.
