Momentum traders are moving the markets and capturing gains from the lows to the highs that they find. This is difficult for the investor who should be looking for a straightforward ride from support to resistance. We are entering high volatility environments. When big money houses come out and say they are going to have their best trading quarters after the monster moves, we know they are influencing the markets. Today we sit at 3086 – key resistance. Coronavirus is NOT the reason the markets are moving – it just was a catalyst. In high volatility markets, we look for deep levels of support looking for strength and high levels of resistance looking for any weakness to engage.
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WEEKLY PRICE ACTION
Earnings season tapering off now. Monthly support has shifted down with and now sits at 2839.5. We have 200 points of congestion to work through-and we did that in one day – that’s unnatural and very prone to reversal.
Sharing links for each of the charts we follow that (if you have ThinkorSwim) you can load directly onto your charts.
NEW LINK FOR TODAY’S TRADING DATA EXCEL SPREADSHEET –
REMEMBER, WE ARE USING PROVEN SUPPORT AS LONG ENTRIES AND PROVEN RESISTANCE AS SHORT ENTRIES IN THIS MARKET– If those levels have passed you, simply walk your targets up the levels noted on the spreadsheet as the next entry as long as trend prevails.
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COMMODITY & CURRENCY WATCH
Gold broke hard before recovering (remember the volatility squeeze we spoke about that told us something was coming)- these sorts of things it is important to add to your memory. Pullbacks are buying zones as we recover above 1600. We’ll still be running to the upside as soon as the chart has worked off its overbought condition. The US dollar has rolled right over into deeper support. Currency markets remain extremely volatile with sharp moves across the board, so ripple effects should slip into the US dollar as they have. WTI has made a 13% move to the upside from its low. Recovering 50.12-50.46 will be critical for any bullish motion to take over. And that seems very far away. We will need to hold 45ish or risk collapse of the sector but we will whipsaw here as well.
TRADING VIEW & ACTION PLAN
We are still looking at choppy news-driven with our deep fade running into more momentum traders who give us trading ranges that are large. Bearish at the first passes from resistance to support. Levels near 2995 are support regions that have seen buyers in the past and 3104 looks like frontline resistance for now. Traders will be whipsawed trying to engage.
The theme of INTRADAY motion is: BREAKDOWN with swift and savage bounces into resistance levels that get pressed higher due to momentum trading.
POSITIVE AS LONG AS WE HOLD ABOVE 3036.5ish today (with big spikes likely with shallow fades back into breakout)
CHOPPY BETWEEN 2954 AND 3032.75
NEGATIVE AS LONG AS WE HOLD BELOW 2994ish today (with sharp bounces failing and deep pullbacks holding)– choppy inside the range.
Follow short term trend and momentum signals while in the intraday trading environment 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 – in play – nasty formations near the bottom here. Take profit at new lows – short is still engaged but wild swings make for tough position holding in the indices
METASTOCK SWING LONG – a reversion to the mean formation showing.
Intraday LONG trading from support edges like ABOVE the VWAP or tight moving averages will give you the least risk event for engaging – removing your trade at resistance will allow you to participate – understanding that countertrend bounces can be swift and sharp but will likely fail under the broken structure of the market.
Intraday SHORT trading from resistance edges like the old highs or bigger moving averages will give you the least risk event for engaging.
Follow the candle trend until candles stop breaking higher.
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