While the weekly and monthly trends are up, the daily chart below shows a market in balance. With Friday being an Inside Day, the markets is setting up for a breakout from balance and may offer a great short term trading opportunity. The matching lows at 2026.75 and 2020.50-2021 are not secure lows. Odds are they get tested and/or taken out this week. A break and hold below 2020.50 puts us back into the lower 4-day balance and brings the 2000 area back into focus and below that a range Gap at 1994.25. My bias is to the short side, however, anything can happen.
The profiles below offer some additional clues. The positives (case for the bulls) are:
- Friday was an inside day with a very prominent POC. It will take above average volume for price to move away from the POC
- the leg high at 2043.75 was made in the overnight session - lasting highs are very rarely made in the Globex session
The negatives (case for the bears):
- the rally to new highs has been on low volume.
- we have back to back poor lows below Friday's POC. These poor lows tend to have an exponential effect and reduce the odds of further upside continuation.
My focus for Monday will be on developing Value and I am prepared to "go with" the breakout from Balance i.e. the Inside Day.
The profiles below offer some additional clues. The positives (case for the bulls) are:
- Friday was an inside day with a very prominent POC. It will take above average volume for price to move away from the POC
- the leg high at 2043.75 was made in the overnight session - lasting highs are very rarely made in the Globex session
The negatives (case for the bears):
- the rally to new highs has been on low volume.
- we have back to back poor lows below Friday's POC. These poor lows tend to have an exponential effect and reduce the odds of further upside continuation.
My focus for Monday will be on developing Value and I am prepared to "go with" the breakout from Balance i.e. the Inside Day.
Hi Atul,
ReplyDeleteHow do you define a Prominent POC?
Thanks
Steve
Hi Steve - i consider a POC prominent when it 9 or more TPOs wide. I love it when a market opens away from a very prominent POC that is 12-13 TPOs wide because the odds are very high that the markets returns to that level thus presenting a good trading opportunity.
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