Hi E,
Not sure what the justification would be for cutting off the tops (minor highs, including some arguably significant closes) in June to make your downtrend line conform precisely to the July highs. Different analysts have different approaches, of course, but I hold with those who believe that a good trend line should contain all price action prior to clear violation, unless there's a good reason to accept minor violations.
If you're inclined to be bullish, you might draw a small triangle within the larger wedge pattern (with the upper boundary of the triangle starting with the minor high on July 13, and the lower line starting at the July 11 low). You could then suggest that the high's yesterday violated the upper line, if only barely. A breakout on high volume might confirm this pattern, but at the moment it still looks rather weak to me. Ditto on the "wedge-within-a-wedge" that you get if you start with the 6-20 low and the 7/2 high.
One thing that would lead me to watch more closely if we get any further significant upward movement is the peculiar price memory that's currently in effect: Just a little bit more than three years ago (July 21, 1998), the 1998 Summer rally peaked at 2028, setting a mark that was again the scene of struggle prior to the breakout that set off the whole 99-00 mania market. 2030 was again a critical level earlier this year, as the reaction high on 3/15/01 that followed the first return trip below 2000 that we managed earlier this year, and which established the last minor high prior to the collapse to the April low. The big Microsoft gap from earlier this month also measures out just around here (Open 2033, Low 2032): In effect, the last two weeks have been a circuitous return trip to the morning of 7/12, though the optimism of that moment has been transferred from MSFT to others, while 7/12 was a return to trip to the last bit of hope on 3/15, and 3/15 a nostalgic "last glance" at the peak of Summer exuberance in 1998. Finally, there's also a minor uptrend line that the recent action has stealthily picked up (beginning 4-12), that turns all of the rally since then into another larger triangle.
It may all seem rather confusing - even without mixing analyses based on Fibonacci levels and projections, "closing prices only," longer-term trading channels, mathematical price and price-volume indicators, and timing considerations into the stew - but the superimposition of multiple compressive patterns on top of and within each other strikes me as a natural result of a trading range market produced by strong conflicting forces pressing up and down. Also, the July 11 low appears as critical fulcrum in all of these patterns.
Sooner or later, there will be a breakout or breakdown to relative "clear air," or a new decisive impetus that may make all of these notional support or resistance lines seem to melt away. I do think that breaking the downtrend line would be a strong go-long signal and reason to aim for the rally top at least. Determining downside targets is more difficult prior to the critical events that might or might not tend to confirm the patterns in play, but a close below the July 11 low would strongly suggest to me at minimum a test of the wedge's lower boundary line, probably alongside fulfillment of the continuation h&s's measuring implications (at least 1870 or so, more likely lower), and possibly including a wedge breakdown testing the April low.
These two charts sum up my current observations on patterns and horizontal support or resistance (price memories) on the Nasdaq Comp.
Thanks for the price memories:
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Multiple Patterns:
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