nasdaq perhaps to climb out of massive flag formation.
The flag formation in the nasdaq is one of those formations that basically forces you to be a believer in chart formations. If you didn't believe that humans have essentially programmed limits once money gets involved, take a look at this chart. Usually you don't see formations this perfect on the higher time frames. It's actually pretty amazing how tidy this pattern is. It's one of those things that we can't really hope to understand, but when you look, there it is.
That being said, we expect price to move in the direction of the breakout. In this case we have a breakout and price has pulled back shortly before the new york open. This is the perfect storm for price to rise higher. The new york open comes with a 'volatility expected' warning label, meaning it would be no trouble at all for price to drop hard before continuing upward. This is always in the cards, but even more so around periods of volatility like major announcements and/or the new york open.
Finally there is the market phenomenon that even once you have considered everything, it can do the opposite. That's what makes using a high reward:risk ratio so important. You won't be right as much as you want, but when you're right you want to ride it out, and when you're wrong you want to limit the downside.
That being said, we expect price to move in the direction of the breakout. In this case we have a breakout and price has pulled back shortly before the new york open. This is the perfect storm for price to rise higher. The new york open comes with a 'volatility expected' warning label, meaning it would be no trouble at all for price to drop hard before continuing upward. This is always in the cards, but even more so around periods of volatility like major announcements and/or the new york open.
Finally there is the market phenomenon that even once you have considered everything, it can do the opposite. That's what makes using a high reward:risk ratio so important. You won't be right as much as you want, but when you're right you want to ride it out, and when you're wrong you want to limit the downside.
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