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Tuesday, May 24, 2011

Bearish Three-Black-Crows Formation on NQ & NKD & Other Bearish Signals for YM, ES, NQ & TF...

Traders were able to eventually push price up sufficiently on the NKD to fill its gap that occurred right after the earthquake in mid-March. However, the buying stopped immediately after the gap fill and price failed to hold above 10000. Since last Thursday, a bearish Three-Black-Crows candle pattern has formed as shown on the Daily chart below. After a modest rally, price has now fallen back and is holding beneath the 50sma (red). A break with conviction below near-term support levels of 9420 & 9320 could prove to be problematic for this index.

The NQ has broken below its uptrending line that was part of the pink diamond formation on the Daily chart. After completing a Three-Black Crows candle pattern today, price is falling below the diamond apex at around 2285 as I write this in the after-hours trading session as shown on the chart below. The next support level is around 2250.

Further to my post (below) this morning, I would note that downside momentum continues to build on YM, ES, NQ & TF and price is holding beneath their respective 50sma's (red), although the RSI's are beginning to heat up a bit as shown on this Daily chartgrid:

I would also note that the TF has broken and closed below a Head & Shoulders neckline yesterday and today on the Daily chart. An eventual downside potential target lies at 754.80 as shown on the chart below.