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Watch the wedge

Rising wedge patterns are often found at the end of an Elliot 5 wave rally. This is what could be happening with the NASDAQ Index

US NDAQ 100 chart

I’ve drawn the wedge on the chart below.

One common approach to chart based trading is to base entry strategies on trend turning points. That allows a quick stop loss if the trend does not turn but if it does; the payoff can be good.

If this wedge is going to be a turning point, NDAQ will rise to a level a little either side of the resistance line and then begin to fall away, rejecting the resistance. The strategy would be to sell if that happens, placing a buy stop above wherever the peak is established. 

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