The stock market indices in the United States remain bid on every correction. The Nasdaq 100 index found strong support at the 13,000 level, where a double bottom formed.
From that moment on, the market marched higher above the neckline and now threatens to reach the measured move. However, the measured move is only the minimum distance the market should travel after such a pattern as the double bottom. For the bullish conditions to remain in place, the price action should keep forming higher highs and higher lows, something that does happen as we speak.
Despite some Fed members bringing the tapering of asset-purchases into discussion, the market did not react so far. Because of the ongoing weakness in the US dollar, the stock market finds bids on every dip lower, and things are likely to remain the same unless the dollar corrects.
Bulls may want to stay on the long side with a target above 14,000 and a stop loss below 13,400. However, that is not enough for a proper risk-reward ratio.
Therefore, the best way to approach this is to wait for a pullback into 13,500 before going long with a stop at 13,250 and a take-profit that respects the 1:2 risk-reward ratio.
Follow Mircea on Twitter.
