The bear trap scenario recently laid out is certainly in play, with /NQ (Nasdaq 100 E-mini futures) rallying an impressive 4% off today’s earlier lows. While I expect more upside in the coming sessions, it should be noted that /NQ has just run into several interesting resistance levels; 6405 price resistance, downtrend line & uptrend line resistance) where the odds for a minor pullback are decent before a resumption of the uptrend.
I will also add that I don’t see any significant comparable resistance on QQQ with only minor resistance on SPY although /ES (S&P 500 E-minis) does have some moderate price resistance here as well. While swing traders & investors might not be overly concerned as the recent price action, including today’s big reversal, remains bullish, active swing traders & day traders might opt to tighten stops, book profit or even reverse to short for a quick pullback trade with a tight stop overhead (a very aggressive trade, considering the strong bid in the market today, hence the very tight stop). Likewise, swing traders looking to add long exposure might wait to see these resistance levels taken out with conviction, ideally after a brief consolidation or pullback which may or may happen.