The monthly trend has turned back up with October taking out the September Highs, however, the market remains range bound on a weekly basis. One could argue that we are balancing on a monthly basis as well. See weekly chart below. What we witnessed in October was a market that broke below a 20 week balance - almost made it to the lows of the lower balance area at 1788 - found aggressive buyers at 1813 level which also marked a 10% correction - it then re-entered and found acceptance back into the upper balance - the destination became the highs of the upper balance at 2014.50. Coming into Friday's pit session, it not only tagged the 2014.50 but exceeded it by a couple of handles in the overnite session. We now have 2 leg highs made in the Globex (O/N) session that have not been tested in the regular trading session. Coming into the week, we are at another key inflection point. The market can:
Friday the market gapped higher on the Bank of Japan news and their bond buying program. Gaps are a form of Excess and signify a total reordering in market thinking. One of the scenarios discussed under the weekly chart is the market either staying in balance and/or looking above and failing. In the event that does play out, your references are the Gap followed by the closely strung together lows below which are bound to be heavy stops.
Looking at the Profiles below, I see a 2 session Balance - Thursday overnight and Friday Pit Session. Any change will occur outside of this balance area. Coming into Monday, my focus will be on the 2000 level. Staying above 2000 keeps the market in Balance and targets the all time high at 2016.75. Trading below 2000 targets the 8 point range Gap. When we are dealing with a large gap it is not uncommon to require multiple attempts to completely fill the gap; the first attempt is often quickly rejected. This occurs because too many traders have been caught the wrong way. Friday's POC was very prominent - any opening away from this POC has very high odds of returning to this level.
- break above the upper weekly balance and resume the longer term trend - higher;
- look above the 2016.75 level and fail. The destination then becomes the lower extreme of the upper balance area i.e. 1880 level; or
- Stay in balance.
Friday the market gapped higher on the Bank of Japan news and their bond buying program. Gaps are a form of Excess and signify a total reordering in market thinking. One of the scenarios discussed under the weekly chart is the market either staying in balance and/or looking above and failing. In the event that does play out, your references are the Gap followed by the closely strung together lows below which are bound to be heavy stops.
Looking at the Profiles below, I see a 2 session Balance - Thursday overnight and Friday Pit Session. Any change will occur outside of this balance area. Coming into Monday, my focus will be on the 2000 level. Staying above 2000 keeps the market in Balance and targets the all time high at 2016.75. Trading below 2000 targets the 8 point range Gap. When we are dealing with a large gap it is not uncommon to require multiple attempts to completely fill the gap; the first attempt is often quickly rejected. This occurs because too many traders have been caught the wrong way. Friday's POC was very prominent - any opening away from this POC has very high odds of returning to this level.
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