On Tuesday, an engineered gap-up open above the key 50-day moving average on the daily chart (7540) again failed to attract much short-covering, thus, instead of rocketing up as they wanted, it was sold, NQ pullback down and again closed below the 50-day moving average on the daily chart.
Failure to trigger short-covering above the 50-dma will attract heavy selling. Already, on Tuesday NQ has dropped back down to key intraday support the 200-ma on the 5-minute chart. That 200-ma (7515) is now intraday line-in-the-sand for NQ on Wednesday.
Trading below the 200-ma (7515) on Wednesday is going to start to run-over some trailing stop-losses. If so the next support is at 7440, but a 1:1 downside target of wave a-b-c down from Tuesday swing high is not until 7420. However, if the market get bearish, the next major support, the 20-dma, is not until 7350.
They may try to engineer another rally above the 50-dma. If so, and if NQ should trade above 7515, we could see NQ rally to another higher-high on Wednesday.
