Nasdaq Long Term Price Projection

Nasdaq Long Term Price Projection

Having Day Traded FTSE and DOW for a few years I’ve built up an over-familiarity with them that skews my judgement when ┬ámaking long term forecasts. Furthermore, it’s not often that I’ll swing trade these Indices because again, my familiarity with them causes me to cut positions too early for the wrong reasons, i.e I’m so used to their constant twists and turns, I’ll often exit a swing trade with a view to re-entering at more favourable levels only to end up missing the re-entry opportunity and missing the bulk of the swing move.

However, I’ve never day traded the Nasdaq, so when it comes to longer term forecasting Nasdaq is sometimes where I turn.

Interestingly this is potentially a very bullish long term chart when using basic price projections against the current trend that forcefully broke out from a long winded consolidation.

It’s very common for a break-away gap to eventually become both support and a future Fibonacci retracement level and in the case of the Nasdaq daily chart we could have actually used that gap to predict this Week’s high as far as a Month ago. Fibonacci projections are something of a black magic, but they can work well, noting on this occasion all of the Fibonacci levels have lined up with price supports.

Furthermore in the same chart, if we use the high to low distance of the 2011 consolidation area as a price projection for the break-out that followed, we get a potential long term upside target in the 2880 to 2900+ region:

Moving out to the Monthly chart to see what kind of resistance lies immediately ahead, we find that there’s very little in the way of resistance right up to…. you guessed it, 2900:

So moving back to the daily chart with the Fibonacci tool in position, and making the assumption that price should retrace from the current level, we have 2 potential retrace targets, one at the 23.6% fib retracement level circa 2491 and a more solid support combined with the 38.2% retracement level at circa 2430

I’m not kidding myself here, this is very early days for such an optomistic upside target, more so when the fundamental world around us appears to be falling apart, but a retrace finding support at either of the 2 aforementioned levels will have me interested in a swing long position that should slice through all of the fresh air above and achieve the target zone of 2900

Just as a disclaimer, I’m a bear by nature but I don’t let that cloud my judgement where T.A is concerned, and if we see the right price action in the shorter term to validate this potential skywards move, I’ll be happy to put my money on it.

4 Comments
  • bracke
    Posted at 12:10h, 23 February

    RS2000

    I appreciate that this is not the correct place to post this comment but didn’t know where else to do so.

    I have been looking at your swing trade record. Apart from a couple of large wins the majority of your trades gain you approx 30-50 points which I do not argue with but I was under the impression that swing trading was about holding longer for larger gains.

    This prompts a number of questions;

    1 Are you closing the trades too early?

    2 Are your stops incorrectly placed ie. too tight?

    3 Are you not really swing trading but trading a day/swing trade hybrid?

    The above is not a criticism merely a question.

  • RS2OOO
    Posted at 17:38h, 24 February

    bracke,

    I’ve briefly covered this situation in this post: http://www.indexswingtrading.com/general/this-weeks-swing-trading-review-4th-february-2012

    In parenthesis:

    1 Are you closing the trades too early?

    Not really. All but a couple of the trades would have turned into significant losses had I not closed them when I did. Because I work on a tight risk/reward, in order to achieve the tightest stop loss possible I sometimes enter positions very early in the development of a trade-able pattern. If the pattern begins to fail, I abandon ship. So far, this has avoided losses which of course is the main objective to trading.

    2 Are your stops incorrectly placed ie. too tight?

    Occasionally yes they are. But in the main, Year to date at least, my stop placement has saved me from losses more than it has reduced potential wins.

    3 Are you not really swing trading but trading a day/swing trade hybrid?

    You are well aware of my long day trading history. The transition to swing trading has only been something I’ve worked on for around 18 Months to 2 years. I do not have a “set in stone” swing trading system in the same way I did for day trading, mainy using S/R to determine entries, limits and stops. You are correct in one respect though, before entering a swing trade I generally drill down to the 5 min chart to make sure my day trading system is signalling the same direction as the swing trade I’m about to take.

    In conclusion there is still much to do before I can confidently say I’ve got a swing trading system that consistently works. But, without wishing to speak too soon, there are 4 trading days left in February and as long as I don’t take any significant losses in that time, this will be my most profitable 2 consecutive Months /YTD swing trading result.

    After deducting losses, my swing trades are currently up 1546 points year to date (realised profits – I’m running a couple of losses that may bring that down 60 or so). That’s an average 28 pips per day. Without wanting to sound better than I really am, I would hazard a guess that no other single trader on the bb has achieved that level of gains be it through day or swing trading or both combined.

    This blog, and the fact that I publicly “showcase” my trades has significantly helped my trading, but going forward there is more work to do.

    In line with your comments, yes, I need to concentrate a little more on quality rather than quantity, but based on the set-ups I’ve taken, some of those big gains could easily have been small gains and some of the small gains could easily have been big gains. I need more time to find a pattern here ahead of making improvements.

  • bracke
    Posted at 19:04h, 24 February

    RS2000

    Thanks for your detailed reply.

    It will be interesting to see how you progress.

    I wish you well with it.

  • RS2OOO
    Posted at 21:18h, 24 February

    bracke,

    Any suggestions or ideas you have re: swinging strategies I’d always be interested in considering.

    Except EMA’s, I know you like them, but I’m an SMA man through and through!