First let us take a look at the QQQQ weekly.
Firstly, the Stoch on this chart has been a fairly strong indicator of when to buy and sell. As you can see, the Stoch called the March low within one bar. Also called the May and June corrections (gray rectangles). We are seeing a similar pattern once again today (mustard rectangle). However, the correction has been bouncing off the trend line I have drawn. Coincidentally, if the QQQQ reaches the trendline this time, it is also the 61.8% fib level. So I expect this bounce to happen in the green area.
Next the daily presents a similar picture.
The key difference is that the stoch, which once again, on these settings, has been a good indicator for QQQQ, is showing a strong bearish momentum. However, like I said, we are still not breaching the trendline nor the August lows. At the moment seems like the price is bouncing off the fib level. $39.04 is going to be a very important level based on the weekly and daily chart. Also take a look at the solid blue line which is going to serve as the next support after 39.04. This is going to be an even more important level because if this is broken, there is no support until around the $37 level which could be very interesting. And looking at the intraday chart, I am concerned that we could even reach those levels:
As you can see a bear trend has been established on the intraday chart as the price has taken out support after support. As I said, right now we are bouncing off the fib but even that was taken out at one point.
So from a trading stand point, what am I doing? I already have puts for the QQQQs and have been selling OTM calls. I am hedged, however, with long calls at 35 strikes. I also have orders to buy more puts if QQQQ goes below 39. If this happens, I will play this with a very tight stop because the price could fake down and then bounce right back. If the price does not do that, my target is $38.46 for the QQQQ.
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