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Fading into the Low Volume Range- Feb 23, 2021

MARKET COMMENTARY – Hello everyone- as expected, the loss of the battleground in the image below took us to the next level of support where we battle this morning. It is the ebb and flow of market motion. Expect traders to put up a fight here but gamma flows still show we could head lower.

  • Considerations
  • We have a weekly close lower than the prior with a rising VIX
  • Markets filled with newer traders will be taken advantage of by more experienced as it will play on their psyche
  • We are watching sector rotation from tech into financials
  • We have low volume nodes down into the initial breakout areas

We are still in a breakout formation that defended itself with retests of support- the first broken ledge was 3880 – the next is 3846 and the ones below that are 3830 and 3806

If you are newer, read The OODA loop. If used properly, it will confirm you are seeing things the right way. It is far better to be out of a trade you wish you were in than being in a trade you wish you were not. Stay present and in the near term, and pay attention to the players before you decide on a plan. BE PATIENT AND WAIT FOR YOUR PRICES to give you the edge. Intraday formations are the ones governing the charts – so use them.

To repeat from yesterday’s post –

Remember to begin with your OODA loop

  • What do you see?
  • Where were the buyers last engaged if they were value buyers?
  • Where were the sellers last engaged if they were value sellers?
  • Who won the last strategic price battle- buyers or sellers?
  • Have we tested significant levels of support or resistance?
  • What is the relative trend?
  • Have you established risk relative to 1) the last battle won and 2) the relative trend?
ES – pay attention to the picture of old resistance attempting to be support
NQ shows the deepest roll
YM shows the most shallow roll
CL is in a dangerous formation – see all that shallow volume in the profile?
GC – shaded areas show the rotation back to support and the attempt at the bounce

**REDUX-Buyers are attempting to hold control after the failure to hold 3880- we sit in the retest of a larger bullish formation testing 3846. Intraday motion remains bearish. Once we drift below that line intraday and fail to recapture it, sellers will be bold in their attack to drive prices deeper.

The NQ_F sits under sector rotation Setting trades long at deep support regions remains the highest probabilities for all our indices. Only after seeing a failure to recover support should we be bearish in our approach to trade positioning. ZONE IN ON ARGUMENTS AT THE VWAP. They will determine future slope and direction. The internal participation levels continue to be mixed here so new highs within the index seem to be fading in some places while holding in others.

PAY ATTENTION TO YOUR STOPS.

Oil fades as expected into support and is now bouncing sharply. Gold and the dollar waffle as traders slip into Bitcoin and cryptocurrencies with greater flow.

Watch the VWAP to help you with the strength of pressure. The loss of the VWAP will force some selling action, and the breach above the VWAP that holds will bring buyers to attempt stronger positioning.

INTRADAY -Keep an eye on the daily resistance and support that we discussed and expect battles at these regions as buyers have a lot to prove to maintain bullish price flow on monthly formations- technical damage is present but likely to be repaired on this large time frame. BIG time frames will help you position with the wind at your back.

Deep dips remain staging grounds for buyers- quick strikes to support and back to resistance appear to be the highest probability for success today- dips could certainly get deeper and spikes could get higher as price action shifts.

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This week’s calendar

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Econoday Calendar for this week

********If you feel you need some help understanding how price moves, remember you have the COACH’S CORNER for video review.

THINKORSWIM USERS –Chart share links for ES_F , NQ_F , YM_F , CL_F , GC_F – levels here for download to the ThinkorSwim platform-to be updated later today

LINK FOR THE TRADING DATA EXCEL SPREADSHEET

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TRADING LEVELS-

If you find yourself being chopped up, widen your time frame or take time away from your screens. This is a time when less is more.

TRADING VIEW & ACTION PLAN
Pullbacks can be deep-once support lines get lost – the lines will shift. Buyers are in a battle to resume dominance.

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.

Here’s a link to the METASTOCK software– you can have your own copy of Metastock to run these tests and setups using Target Rich Trades.

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