Trading On the Nasdaq? Prepare to Be Fried: Chartist
Investors betting on the tech replacement cycle should "prepare to be fried", technical analyst Daryl Guppy, CEO of Guppytraders.com, has warned.
The Nasdaq faces further downside targets based on technical analysis, he told CNBC Thursday.
The tech-heavy index has developed a head-and-shoulders pattern, forming a second right-hand shoulder that is about one percent higher than the first, according to Guppy. (Watch video on left.)
He flagged that the Nasdaq could spiral into a freefall if it falls below the neckline, which stands at around 2,100 points.
"To invalidate these patterns... we need to get above the second shoulder (at) about 2,250," he added.
As for the Dow Jones Industrial Average , he cautioned that a break below 10,200 points would put it on course for a downside target of around 8,400 points.
Dollar May Slide to 84 Yen
There have been rising concerns that the yen’s strength will sap Japan’s exports, after it hit a new high of 84.72 against the dollar.
The pain is not over, as Guppy foresees more downside for dollar-yen at this stage.
Looking at the charts, he said the dollar-yen cross might tumble to a fresh 15-year low of 84.
“The key fact with dollar-yen is (it has an) established downtrend line… (Use) this trendline as a resistance level,” he said.
- Read Guppy's article on the Dow
- Watch Guppy's video on the Dollar-Yen