MARKET COMMENTARY – As Asia markets opened with news from the Chinese, traders spiked prices only to return to sit below our prior highs near 3132. As mentioned yesterday, this is an abbreviated holiday week generally marked by an upward trajectory. Shorts at the breakdown levels continue to be poor trades, reminding us that the markets are still showing initial buying strength at support levels. Repeated tests of support are not as likely to hold as the profit-taking from the last 6 weeks of upside may be engaged to do a bit more of that clearing of the decks before the next round of upside. If we dip below 3110, buyers will need to defend 3106-3098 in the ES_F, or we’ll move into 3078-3084 where we should see another group of buyers defend those lines in the sand. All roads currently point upward, however, so we have our upward levels from 3144 to 3157 as potential targets ahead this week.
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WEEKLY PRICE ACTION
With a 3145 rejection in the overnight session, we breached the top of our range with continuation pressure showing. Market participants may still be in a short term profit taking space as we have faded, and we faded quickly- a signal that there is a bit of supply above. The probable dips in the higher range between the 3097-3081 region we tested, as we did lose 3106 support before recovering last week. Between 3134 and 3157 are still upshot targets in the near term so long as charts can keep Friday’s close near 3112. The weekly close will be important once more in this holiday week but closing over 3110 was a bullish signal from Friday. Positive momentum is continuing to flatten and weaken but holding. Weekly patterns remain strong as do the monthly patterns- from a price perspective. Be cautious adding to swing positions in either direction – particularly if you are considering shorts- as markets are not currently showing that short positions can gain traction at this time. This downdraft just feels like a little profit-taking for now.
COMMODITY & CURRENCY WATCH
Gold continues testing lower support overnight and looks quite weak in the current formations. We need to breach 1475 and hold it for the price action to continue north- so far, lower highs are still bringing sellers to the party. The current range seems to present as 1443-1475 and this morning we sit in the middle of that range. The US dollar had stalled below 98 but this morning, it sits above 98 and in a congested zone. Resistance so far has been strong at 98.7 with 98.4 just below. Support is near 97 for now and holding. WTI rallied aggressively before fading after the breach of noted resistance near 58.4- so we are looking at a bullish break that should test higher supports before rising once more. Support has risen to the regions between 56.2 and 57.12. Resistance levels sit near 58.42 to 60.6.
TRADING VIEW & ACTION PLAN
Mixed power present for now with a likely gap fade as the range of the gap is now quite small. Buyers will have more strength above 3134.75 in the ES_F which will hold as the breakout region with sellers continuing to wage a battle there. Sellers will have more pressure below 3110. Presses to the upside have been finding sellers in place. Upper targets sit near 3137 to 3154. Broadly speaking, buyers have the advantage as long as we hold 3096. The support below that is 3074ish, so the loss of 3089 opens that level below.
Be patient and wait for your setups – this means we wait for key support to engage, and we don’t step in front of moves. Understand what your levels mean and prepare for the potential behavior at those levels. Realize that we could bounce higher than anticipated and fade deeper than anticipated before returning to the trend and range – Follow the trend in the shorter time frames and watch the price action.
The theme of INTRADAY motion is:
POSITIVE AS LONG AS WE HOLD ABOVE 3134ish today (with big spikes likely fading back into congestion)
CHOPPY BETWEEN 3127 AND 3109
NEGATIVE AS LONG AS WE HOLD BELOW 3110ish today (with sharp bounces failing and deep pullbacks holding)– choppy inside the range.
Do what’s working (that means follow short trend and momentum signals while in the intraday spaces) and watch for weakness to develop away from your trade direction in order to leave. Please log in for the definitive levels of engagement today.
METASTOCK SWING SHORT – inactive
METASTOCK SWING LONG – NEW RED DIAMOND shows latest resistance ranges but we have broken through and now potentially are readying for another leg higher.
Intraday LONG trading from support edges like the VWAP or solid moving averages will give you the least risk event for engaging.
Intraday SHORT trading from resistance edges like the old highs will give you the least risk event for engaging.
Follow the candle trend until candles stop breaking higher.
IF YOU HAVE THINKORSWIM, YOU CAN LOAD MY PRIMARY LEVELS FROM THIS LINK. I do not put target or secondary price levels on my charts
NEW LINK FOR TRADING DATA EXCEL SPREADSHEET –REMEMBER, WE ARE USING AGGRESSIVE ENTRIES IN THIS MARKET– If those levels have passed you, simply walk up your targets as the next entry as long as trend prevails.
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