Don't Ignore This Chart!

Another Gap for QQQ


Last week (Monday) I featured an evening star reversal pattern in QQQ. This pattern did not foreshadow further weakness as QQQ firmed in the 161 area the next day and gapped up on Friday. This gap did not last long as QQQ gapped down on Monday morning and filled Friday's gap. We could probably call this an island reversal because the gap up and gap down match.

Today's gap is still a work in progress and may or may not hold. Overall, QQQ has moved sideways the last eight days as two conflicting trends battle it out. Long-term, I think the trend is down because QQQ recorded a 52-week low in late December and the ETF has yet to exceed the early December high. Short-term, the trend is up since December 26th with short-term support marked at 160. A break below this support zone would reverse the short-term uptrend.

It is also possible that a pennant or flag evolves from this short-term consolidation. These are bullish continuation patterns and a break above last week's high would open the door to the low 170s.

On Trend on YouTube

Establishing a Directional Bias

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To Chase or Not to Chase

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- Arthur Hill, CMT

Senior Technical Analyst,

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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