As discussed in the U.S. Stock Market Near-Term Outlook video published over the weekend, I remain on the lookout for a potential Island Cluster Reversal topping pattern in the Nasdaq 100 ($NDX & QQQ). From my experience, Island Reversal & Island Cluster Reversal tops & bottoms are not one of the most reliable candlestick reversal patterns that I've traded over the years & they also offer a very attractive R/R entry as the risk of loss if stopped out is minimal compared to the gain potential, should the pattern play out.
For example, should QQQ gap below this recent cluster of candlesticks soon (which is so far, defined by Friday's lows), one could establish or add to a short position with a relatively tight stops (my preference would be just above the top of the pattern while a more aggressive stop could be placed somewhat above the bottom of the price cluster). As discussed in the video, such a short entry would be for a multi-week to multi-month swing trade with my targets TBD should this, or any other decent evidence of a reversal in coming days/weeks occur.
At this point, TQQQ will be added as a Short Trade Setup with an entry to be triggered on any gap below 112.07 (Friday's low) on QQQ with a stop above 113.30 (6 cents above Friday's high). Targets TBD soon but one option for a quick trade would be to target a backfill of Friday's gap, covering just above Thursday's high of 109.80 in QQQ. Of course, should a gap down occur, one would have to assess whether or not a short entry targeting a backfill of the gap would be worth it based upon the entry price.