Nasdaq Trading for the last January 25.01.27

Hello, this is Greedy All-Day.
Today’s analysis focuses on the NASDAQ.

Friday’s NASDAQ Briefing Results
Chart:

On Friday, the NASDAQ broke above the purple box resistance trendline but failed to break through the next major resistance zone at 22093.5–22111.25.

After the ascending trendline broke, the sell entry zone at 21854.25 was triggered. Although there was a brief rebound before the U.S. session closed, the price eventually dropped further on Monday.

Currently, the price has fallen approximately 300 points from the entry, yielding a profit of around $6,000 per contract.

Detailed Analysis of Friday’s Patterns
Chart:

One key point to note from Friday’s briefing was that the upward pattern was forming a pennant.
When the black box supply zone broke, the chart showed signs of consolidation, as seen with the light blue trendlines.

This consolidation involved higher lows and lower highs, but the breakout signal came from the red box.
However, the breakout attempt failed after the price couldn’t break through the green box.

If the green box had been broken, the pattern would have shifted from a pennant to an ascending triangle, signaling stronger bullish momentum.
Instead, the failure to break out suggests that the pennant formation remains valid.

Also, considering the timing, the breakout attempt coincided with a scheduled economic indicator release, which is why setting a break-even stop-loss would have been the prudent choice.

Economic data releases often disrupt natural chart trends with sudden bursts of trading volume, which is why it’s generally recommended to avoid trading immediately before or after such events.

Trading Within Trend Breaks
Chart:

Using the red box as an example:

Let’s say you entered after the red box breakout 15 minutes before the economic release, even though it wasn’t an ideal entry.

Stop-Loss Strategy: A break-even stop-loss should be applied to protect against volatility during the announcement.
First Stop: If the price falls below your entry level, it’s the first signal to exit the trade.
Second Stop: If the price breaks below the blue box, you must exit because the ascending trendline is broken, invalidating the uptrend.
Stop-loss levels are challenging to specify as fixed numbers because they depend on time and price movement. For trend trading, entry and exit decisions must be adaptive and based on real-time conditions.

Daily Chart Analysis
Chart:

The daily chart shows:

A significant bearish candle following a break of the short-term ascending trendline and the major support level.
A gap-down open, with the price now inside the Ichimoku Cloud.
The current price is testing support near the daily 20 EMA.
Potential Scenarios:

Upside: There’s a slight chance for a gap-filling rebound.
Downside:
A retest of the red box support zone near 21308.
Support at the 60 EMA or Ichimoku Cloud bottom near 21220.
Further major support levels are 21006 and 20694.

Weekly Chart Analysis
Chart:

Last week’s bearish weekly candle completely engulfed the previous week’s body.

The remaining lower wick reaches down to around 21377.75.

Current Market Momentum
Chart:

The NASDAQ is currently in a steep, almost vertical downtrend.

This movement makes it essential to remain cautious:

Entering short positions at this stage carries the risk of a rebound to fill the gap.
Entering long positions could result in further losses if the trend continues downward.
Since most entry points have already been invalidated, it’s best to stay on the sidelines for now.

Conclusion
With Asian markets observing holidays next week (Korea from Monday, China from Tuesday, and Hong Kong from Wednesday), trading volumes are expected to decrease.

Given the current market conditions, taking a step back and avoiding unnecessary trades might be the wisest approach.

Unless significant news impacts the market, there’s a possibility of the session closing with some recovery.

Thank you for your hard work this week, and let’s finish strong. See you in the next briefing! 🚀