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QQQ Head & Shoulders Pattern Breakdown

We have an impulsive breakdown below the 120-minute H&S pattern as well as the key 136.40 support level so far today. Right behind the June 9th bearish engulfing candle in QQQ & other technical breakdowns in QQQ & the FAAMG stocks, this is one of the highest probability sell signals on the Q's in many month. While the H&S pattern measured target comes in around the 131.60 level, my preferred swing target is the 130.50ish level. Updated 120-minute chart:

QQQ 120-minute June 29th

QQQ 120-minute June 29th

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Jun 29, 2017 2:11pm|Categories: Equity Market Analysis|Tags: , |4 Comments

4 Comments

  1. malejandro1972 June 29, 2017 5:53 pm at 5:53 pm

    Randy, what do you think about the possibilities of a throwback to the neckline before the Qs resume down? Considering we are coming up on a holiday, throwback into monday 3rd, resuming down the 5th?
    Thanks Mark

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    • rsotc June 29, 2017 6:14 pm at 6:14 pm

      Yes, a backtest of the neckline on that QQQ H&S is certainly a possibility tomorrow, especially after that late-day bounce into the close today. If so, that would be an objective level to add short exposure although the higher-probability entry would be to wait for another 60 or 120-minute candlestick close below the 136.40 level or even better, below today’s lows, even if that comes on a big gap down tomorrow.

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  2. oxienergie June 29, 2017 6:00 pm at 6:00 pm

    And wouldn’t you know it, we closed above the 137,40 level. That’s the key support level, not 136,40 as in the post, right?
    So we still cannot be sure, if it goes down or will be bought back up again right away.

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    • rsotc June 29, 2017 6:15 pm at 6:15 pm

      Yes, excellent point. QQQ managed to pull off a stick-save into the close today to finish the session just above the key 136.40 level. I think that may have been the result of XLK (tech ETF) making the first tag of the bottom of the channel (uptrend line) on the daily chart. Reactions on the initial tag of a support level (initial as in the first time in a while) almost always produce a reaction.

      As you say, best to see that 136.40 get taken out with conviction but from my analysis on not just QQQ but SPY along with nearly all of the sectors within the SPX, I think the odds for at least another 4% or so downside in the coming weeks is very good.

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