As of Friday's Close, all trends in all timeframes have turned down. The question is whether this is just some much needed liquidation to flush out the weak longs versus a more meaningful correction. Geopolitical and economic news have certainly contributed to this recent pullback. However, it is too early to tell if this is a serious correction. Further continuation to the downside targets the June low at 1906.50 and below that a range Gap between 1892 and 1896.25.
The weekly bar below shows 7 weeks of gains being erased in a single week - this is what liquidations look like. Further continuation to the downside brings us near the top of a 13 week balance area. The breakout level at 1892 which also fills the range gap mentioned above remains the focus of my attention.
The daily bar chart below helps to illustrate the key references mentioned above. Filling the Gap at 1892 will amount to about a 5 % correction of the all time highs but by no means a major correction. Another key point I wanted to illustrate here is recognizing a reversal using Market Profile. If you look at the excess high as illustrated by the daily bar on July 24 followed by a gap the next day - that is clear sign of a reversal, in fact it is the most potent combination for a reversal - when observing a multiple day auction. Following the gap down, the market came into an uncomfortable 4 day balance (as markets move from trend to balance and then either resume the trend or reverse) followed by another gap down on Jul 31 - the beginning of a sharp liquidating break into Friday's close. Recognizing these reversals are key to making money.
With most of the major economic news out of the way, the calendar next week is fairly light. I suspect that after the sharp sell off the last 2 days, the market may come into balance and/or do some backing & filling given the structure left behind. While Friday's Value was overlapping to lower, the POC was fairly prominent and did not migrate much lower than the mid point of the range. This is true for Thursday as well. While the trend is down, my focus will be on developing Value.
The weekly bar below shows 7 weeks of gains being erased in a single week - this is what liquidations look like. Further continuation to the downside brings us near the top of a 13 week balance area. The breakout level at 1892 which also fills the range gap mentioned above remains the focus of my attention.
The daily bar chart below helps to illustrate the key references mentioned above. Filling the Gap at 1892 will amount to about a 5 % correction of the all time highs but by no means a major correction. Another key point I wanted to illustrate here is recognizing a reversal using Market Profile. If you look at the excess high as illustrated by the daily bar on July 24 followed by a gap the next day - that is clear sign of a reversal, in fact it is the most potent combination for a reversal - when observing a multiple day auction. Following the gap down, the market came into an uncomfortable 4 day balance (as markets move from trend to balance and then either resume the trend or reverse) followed by another gap down on Jul 31 - the beginning of a sharp liquidating break into Friday's close. Recognizing these reversals are key to making money.
With most of the major economic news out of the way, the calendar next week is fairly light. I suspect that after the sharp sell off the last 2 days, the market may come into balance and/or do some backing & filling given the structure left behind. While Friday's Value was overlapping to lower, the POC was fairly prominent and did not migrate much lower than the mid point of the range. This is true for Thursday as well. While the trend is down, my focus will be on developing Value.
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