ChartWatchers

QQQQ REMAINS IN CLEAR DOWNTREND

Chip Anderson

Chip Anderson

President, StockCharts.com

On the weekly QQQQ chart, it is clear that the stock remains in a falling price channel and has yet to break key resistance at 38. There are two falling price channels on the chart (magenta trendlines) and lessons from the first can be applied to now to identify a trend reversal.

Both price channels are similar in duration (3-4 months) and depth (~15%). The first price channel ended after a long black candlestick and the current one formed a long black candlestick four weeks ago (red arrows). The trend reversed with a break above the upper trendline and high of the long black candlestick (May-05).

To reverse the current downtrend, QQQQ needs to break the upper trendline and move above 38. Until this happens, there is no evidence of a trend change and we should expect the trend to continue (lower prices). The most glaring difference: the current price channel is much steeper than the first. This shows that selling pressure was much more intense over the last few months.

Chart 1

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More