The bigger picture for NQ:
NQ has been forming a bear flag pattern on the daily chart, trading just above its 20-day moving average since last week, and ready to break and tank down hard at anytime, and so it did on Monday, breaking down below its 20-dma, see chart below.
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It looks like NQ would need to drop down to 3450 before it goes into an oversold conditions, but the next major support is not until 3400, so there is still plenty of room for NQ to go down before going into an oversold condition with a strong support zone.
Recap & Tuesday's Guideline:
NQ opened above key support on Monday and tried to rally, but without much momentum, attracted some profit-taking that started to trigger a whole series of algorithm sell programs that took NQ quickly down to support zone mentioned in my precious blog, 3500 area. The Dow and S&P 500 also tanked hard on Monday.
At the end of the day, profit-taking at support caused the market to rally into the close. For Tuesday, I will be looking for another lower low, below Monday swing low, but, as long as any NQ pullback rally does not clearly break above 3523 area.
A clear and sustained break above 3523 area could trigger a short-covering rally, with resistances at 3530 then 3540.
Key price level for Tuesday morning is 3510.
-- Opening and staying below 3510 is an indication that NQ is going to tank again to lower-low, next support is at 3450.
-- A clear and sustained break above 3510 implies NQ is going into a sideways consolidation mode, likely an inside day, with resistance at 3530.
