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Fast Moves & Failed Moves – Mar 2, 2021

MARKET COMMENTARY – Fast moves often bring reversals. We had one overnight that held support and recovered. We sit below yesterday’s open. Earnings releases are still in play. Bond market action has more experienced traders waiting for some news from the Fed. When we see news about the bond markets, we need to keep on high alert. Remember that credit rules the world.

As always, we will listen but not assume the news will do something- it remains important to follow quickly and not predict.

  • Considerations
  • We have another weekly close lower than the prior with a rising VIX
  • Buyers are trying to hold critical gamma levels near 3800
  • We are watching sector rotation from tech continue
  • We have low volume nodes down into the initial breakout areas

NOTE FROM LAST WEEK -“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” We came right into the 3806 and began to bounce.

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.

Remember your OODA loop – OBSERVE, ORIENT, DECIDE, ACT

  • What do you see?
    • This means -what is the current battle at play?
  • Where were the buyers last engaged if they were value buyers?
    • This means -where do we see the congestion that leads to a bounce?
  • Where were the sellers last engaged if they were value sellers?
    • This means – -where do we see the congestion that leads to a fade?
  • Who won the last strategic price battle- buyers or sellers?
  • Have we tested significant levels of support or resistance?
  • What is the relative trend?
    • This means – relative to the day at hand, who is forcing the most pressure on price?
  • Have you established risk relative to –
    • 1) the last battle won and
    • 2) the relative trend?

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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PRIOR DAY’S LIVE TRADING ROOM RECORDING

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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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