The Impulse Master indicator accurately identified the top in NQ (Nasdaq Futures) and signaled a shift in market structure. The key observation here is the breakdown under the critical support level, which confirmed a reversal in the trend.
Explanation of the Pattern:
Supply Zone and Reversal Signal:
The chart highlights a supply zone where bullish momentum begins to stall. This area marks the exhaustion of buying pressure, as seen with the “Turn Down” label. The price repeatedly failed to break higher within this zone, signaling a potential reversal.
Support Breakdown Logic:
A rally typically continues as long as the price respects key support levels. Think of the structure as comprising a micro wave iv (a small corrective dip) followed by a wave v up (a final push higher).
In this case, the breakdown below the first major support invalidates the continuation of the uptrend. The failure of bulls to produce a higher high off the low created by wave iv is a clear indication that the rally has ended.
Confirmation of Trend Reversal:
Once the price broke below support, the rally’s structure was compromised. This failure to sustain higher levels signals the transition from a bullish trend to a bearish phase, as confirmed by the “Trend Down” signal and the formation of resistance at 21,652.81.
Indicator Precision:
The Impulse Master indicator effectively mapped the turning points in the market, including the Breakout Zone, the critical support retest, and the ultimate rejection leading to a downtrend.
Key Takeaway:
The breakdown below ** the key support** is a crucial confirmation that the uptrend has concluded. This methodology highlights the importance of observing raising support levels as benchmarks for trend continuation or bearish reversal. ***When bulls fail to push the priceto a higher high after a corrective dip, then drops under the previously made low, it serves as a reliable signal that the rally is over and a new down trending move might have started.***