COMPQ Nasdaq Daily Chart Megaphone Expansion Patterns Upward-Sloping and Sideways Channels Overbot Negative Divergence

The Nasdaq shows a strong sideways channel through 4350-4500. The 4350 level was/is the level for a neck line for head and shoulders patterns. An H&S pattern was nullified in early August where price kept on moving higher instead of creating a right shoulder. That 4480-ish level is the area of the triple top and worth a mention. Many technicians will say "there is no such thing as a triple top." Sometimes they are correct and sometimes not. Keystone considers it a 50/50 toss-up since some triple tops hold, and some do not, likewise, some triple bottoms hold, and some do not. There is no firm guideline to use. But in this instance, note how price came up in early August and instead of holding the triple top kept on going nullifying the triple top pattern.

Price is honoring the megaphone patterns shown in blue and purple. The handle is drawn to create the picture of a megaphone. These patterns are also simply called expansion patterns. Price blew out the top rails but is retreating for back kisses today. The expectation is that price would continue lower back inside the megaphones. The current price levels may serve as the head for a future H&S pattern that will have to be followed as it develops. Note that the lower targets for the megaphone patterns are in the 4250-4300 zone exactly where the 200-day MA will be coming up through to form a confluence of support.

The red lines show negative divergence for the indicators except for some VST juice in the money flow (green line) that would like to see a higher high in price after today's initial pullback occurs. The weekly chart is setting up very weak with negative divergence in place or developing so the projection would be for price to roll over in the days and weeks ahead. The volume continues to drop off showing a lack of trader enthusiasm. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.