Nasdaq is looking extreme bearish as per the weekly chart shown here. We can see a long term H&S formation since last 2 years and now Nasdaq seem to be on verge of breaking down from there.
We don’t have a close below neckline yet but we can see that the right shoulder has fallen in clear 5 waves so we have downtrend confirmation from Elliott Waves perspective. The corrective bounce also seem to be complete as it has already retraced to 4th wave though difficult to say 100% now. It might be doing an ABC of which A is done and B is forming now touching the neckline and C would be the final bounce. However, it’s not necessary and Nasdaq could continue falling from here and break of wave 5 low would be confirmation of that.
Typically we take size of head to estimate the breakout/breakdown size but this H&S is tilted to the right. This also signifies weakness but some of the downside is covered by this tilt itself so taking full size of head is not prudent here. Having said that, we can still work with a better estimate, i.e. my favourite Elliott Wave š. If we take the size of right shoulder down impulse, it gives a move size of nearly 23%. In terms of absolute points, this might take us near 8000 territory (Nasdaq is trading around 10700 as of now).
Not a great time for IT and new-age company stocks. But as they say, “this too shall pass.”
