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IWM Small Caps Approaching Support Within a Falling Wedge Pattern

While the 60-minute charts of QQQ & SPY remain bearish, IWM (Russell 2000 Small Cap Index ETF) could mount at least a small rally should it make a convincing break above this 60-min bullish falling wedge pattern as the small caps approach support. Of course, support is support until & unless broken and as of now, IWM remains solidly in a near-term downtrend while trading below the downtrend line off the November 1st highs (top of wedge).

IWM 60-min Nov 15th

IWM 60-min Nov 15th

Orange scenario outlines a breakout soon while the purple scenario has prices continue to move down within the wedge for a while. Also note that while bullish divergences are forming on the 60-minute time frame, both the PPO signal line & the 13/33ema histogram clearly remain below zero confirming the intermediate-term trend remains bearish for now. Should IWM break out, the first targets & likely stopping points for any rally would be 147.43 then 148.37 (first two horizontal lines overhead). Likewise, any breakout & rally on IWM would most likely coincide with a backtest of the 258.39 resistance level on SPY as well as the 153.85 resistance level on QQQ (60-minute charts).

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2017-11-15T15:12:29+00:00 Nov 15, 2017 3:12pm|Categories: Equity Market Analysis|Tags: , , , , , |4 Comments

4 Comments

  1. rksleung November 15, 2017 4:08 pm at 4:08 pm

    SIgh.. I had puts to cover and was waiting for 151.3. Sigh.. Seems like those puts will be gone now with QQQ likely going back to 153.8 first before heading down.

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    • rsotc November 15, 2017 4:31 pm at 4:31 pm

      Maybe, maybe not. The pattern of overnight selloffs followed by the dip buyers stepping in at the open, causing a rally from there but the Q’s still closing lower for the day remains intact. QQQ closed down a -0.47% today & if the pattern continues, it will once again sell off overnight & gap down lower tomorrow.
      If not, any push back to 153.85 will once again offer an objective short entry with a stop somewhat above. That scenario I highlighted with QQQ & SPY bouncing back to support today was only contingent on IWM breaking out & rallying to the aforementioned resistance levels which may or may not happen.

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  2. rksleung November 15, 2017 4:11 pm at 4:11 pm

    QQQ can easily close at 152.3 today. A some suckers (THE FED AGAIN????? ECB??? SNB????) come it and snap it up 30cents in one minute. WTF is that???

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  3. rksleung November 16, 2017 10:38 am at 10:38 am

    You can’t succeed trading this market if you just follow those support and resistance levels. First, they don’t allow stawks to go the support. You have to buy right below reaching the support. Also, shorting the resistance is futile. Look at this 153.8 acting as a resistance for more than one week and it took them just one day to break it. And remember. QQQ was making a lower and lower low and low and behold, they manage to break it in the first hour.

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