From TradingView · · 1m 20s
QQQ shakeout loses steam before Fed decision
A technical breakdown and reversal on Monday failed to hold Tuesday as traders await the FOMC meeting.
In brief
A technical breakdown and reversal on Monday failed to hold Tuesday as traders await the FOMC meeting. Yesterday's bullish shakeout signal at $700 is weakening after today's drift lower on light volume failed to attract buyers. Originally reported by TradingView.
Quiet session before Fed meeting
QQQ closed at $704.54, down 0.65% on light volume. The range was just 66% of normal as traders waited for the FOMC decision.
Monday's shakeout was textbook
Price gapped below the weekly low to $700, triggered stop losses, then reversed on the heaviest volume of the sequence. That's a properly confirmed demand signal.
“Yesterday was a shakeout, price gapped below the weekly low into 700, ran the stops sitting under it, and reversed”
Tuesday gave back the gains
Today's down bar returned most of Monday's recovery. The close at $704.54 was just 15% up from the low, near the bottom of the range.
Buyers didn't show up to defend
Price came back to test $700 demand, but buyers didn't turn up. Sellers pushed it down on light volume, showing weak follow-through to Monday's strong signal.
“That's weak follow-through to a strong signal, the most common way a shakeout starts to fail”
The signal isn't dead yet
The $702.74 low remains unbroken, so the shakeout signal still holds. But another session like this ends it completely.
Key levels to watch Wednesday
Above: $709.26 restores the shakeout, $714 triggers technical signals. Below: $702.74 is the line. Lose it and $700 is the last shelf before $686.78.
The big picture
Yesterday's bullish shakeout signal at $700 is weakening after today's drift lower on light volume failed to attract buyers.
