For US stock traders and investors the last few months have ones which could best be described as interesting and exhilarating, with extreme volatility first driving the primary indices higher and lower with equal speed and momentum, and mirrored in the VIX which soared to over 37 in February, before returning to the relatively calm waters of its current trading level at 15.09 as at the time of writing.
And whilst the Dow and the S&P 500 have their own stories to tell, it is the NQ emini which is perhaps the most interesting at present, particularly given its characteristics as a leading of index, and which may perhaps give us a view of where the US stock markets are heading longer term. And for this we need look no further than the daily chart for the NQ where we are now approaching a key level once more as the index trades at 6810.75 as markets await the latest news from the US president on the deal with Iran. A deal whereby sanctions were eased in exchange for commitments that Tehran would limit its nuclear program accordingly. As such, US markets have been nervous and lacking market direction ahead of the announcement. However, from a technical perspective the well developed resistance level denoted with the red dashed line at the 6870 price level is now key. This was the level which capped a strong rally in March, and held once again in mid April, sending the index lower, and back to trade at the volume point of control which sits at 6575 as denoted with the yellow dashed line. So for longer term stock investors the 6870 level is now all important, and if breached will then provide the necessary platform of support for a move higher for the index, and with volume on the histogram to the right of the chart falling as we move to 7,000 and beyond, this will help to support any rally higher.
However, from a volume price analysis perspective, the rally of the last few days has looked rather weak, with three up days of price action associated with falling volume, and whilst there is no direct anomaly between the candle and the associated volume, the collective relationship suggests weakness ahead, and does not suggest a strongly bullish picture. However, back to the key point, which is the key 6870 resistance level now approaching whose significance cannot be underestimated.
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