Since our daily upside targets have been met on the Nasdaq, we've been maintaining a focus on the 45 minute charts for support and additional target levels. Having broken through the daily target levels, we need to be on the lookout for the strong possibility of a stronger pullback than we've seen during this recent rally. Here's the current 45 minute pit session chart:

Click on image to enlarge!

The blue dashed lines show how the current high was projected; 1.272 times the prior high to low swing, projected upwards from that low. That’s our initial target in any given swing. Once this level is met, there’s a high probability of a pause or pullback since many investors will consider the market as overbought.

Yesterday gave us this pullback and the black lines show how the downside target is calculated; the prior low to current high multiplied by 1.272 and projected downward from that high. There’s an intervening support factor to consider however. The .786 retracement from the same low to high overlaps a 100% price projection from a prior high to low swing. We always look to a hold or break of the .786 level in order to determine whether price will follow through to targets. The price projection means that this market has pulled back exactly this much during a previous corrective decline in this rally, and then bounced to new swing highs. Additionally, timing factors on the chart represent the duration of prior corrective declines. When time and price support factors come together this way there’s a strong chance of a reversal back to upside. The question is, will that upside reversal occur at the current low or at the downside target? Let’s see if the current low at key support holds at the open. If the slide continues we’ll look to the initial downside target level as a likely spot for a pause or bounce. New swing lows will also create additional resistance levels to consider on a bounce. Should we close today below yesterday’s lows, I’ll post an updated version of this chart on my chart of the day page tomorrow morning!

For more from Mark including his “Chart of the Day”, visit MJBraun.net.