Since May 19, the QQQQ has been carving out a high level sideways coil type of consolidation pattern. Until this morning's spike to the upside from 49.00 to 50.00, I was expecting a deeper decline into the 48.25/00 area for a test of both the prior pullback low and the March-May support line. However, yesterday's late-session swoon to 48.67 was the low for the most recent decline. This morning's upside reversal strength leaves little doubt that the post March 19 coil pattern is stronger than I had originally envisioned. What now? The coil should resolve itself with a breakout to the upside, which means that any forthcoming sudden weakness should be contained above 49.00 prior to a thrust too new recovery highs projected into the 50.90-51.30 target zone.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.