In case you haven’t noticed, the Nasdaq 100 (lead by the FAANG stocks), has been making new all time highs now for WEEKS. Since the 14K break, the trend has been decisively bullish, so why would we consider a short position which goes against such a spectacular and celebrated rally?
1) recent price action has been showing glimpses of weakness starting to appear which are more apparent on intra day charts. This has been accompanied by a tweezer top candle formation along with a very high risk of retrace.
2) the reward/risk based on the nearest support is very attractive since there is no clear historical level until around 14,200.
Keep in mind, this idea is being considered purely from a technical standpoint, and aims to capitalize on a short term and healthy retrace back to a realistic support area. This is NOT to be confused with expecting a “bear market”.
The Nasdaq 100 can be shorted a number of ways. You can consider CFD instruments like NSXUSD, or USTech on some platforms, or consider the QQQ ETF outright. This idea is based on the CFD prices.
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Here’s the swing trade idea:
Sell Stop: 14850
Stop Loss: 15000
Target 1: 14600
Target 2: 14550
Target 3: 14300
This is a counter trend trade and HIGHLY aggressive which means there is a good chance it can get stopped out. IF the Nasdaq 100 breaks above 15K, this trade premise is negated. It is VERY important to respect the stop loss order, especially in an instrument that can run on and on for reasons that are far from obvious or logical. If this amount of risk is not within the scope of your personal tolerance, you should paper trade, or consider a smaller than usual position size.
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