NQ opened above trading range high on Thursday but failed to stay above the high as NQ quickly dropped back into the range, signaling a false breakout situation and indicating a fast reversal back down as breakout traders get run over on the ways down. A usual target for a false breakout is a break below trading range low.
On Thursday, it was a classic textbook pattern. Once the downside target was reached, NQ reversed back to test the breakdown price level, 5335, from below.
5335 will now become key resistance for Friday.
-- Failure to break back above 5335 is an indication selling programs could come in to sell, downside target is Thursday swing low.
-- Breaking back above 5335 is an indication NQ is going to rally back to above Thursday falsebreak swing high.
