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Breakout in Play- Jun 8, 2021

MARKET COMMENTARY – Outlook – BROAD BULLISH STANCE resumes holds as breakout above 4220 is in play with 4240 as new upside break. The dollar is bouncing around after failing 90 once more. Fed meeting ahead this month and the AAPL conference in the pipeline of news. Consumer price index and corporate tax rates in the news Repurchasing window behavior remains disturbingly active. More small liquidation breaks still likely as volatility window shows price action as 1000 points wide (not a typo).

Observations

  • Metastock -a buy zone engaged near 4071 – sell zone holds below 4178-(testing as support for the current cycle) -broad sideways pattern- but still showing bullish formations for entry on pullback
  • Target 4220 achieved – next target 4240 upside as we move higher
  • Apple moves closer to their self driving vehicle plans
  • NVDIA in ‘friendly’ takeover of chip designer ARM
  • Oil moving into higher into 70,28 where the call sellers are at peak – but not breaking out
  • Bitcoin falling as the markets in crypto falter and break formations- very high volatility in the short term
  • US Dollar locked below 91 but testing 89.6 in a battle to hold a base seems to have held with a move with some prints at 90 continuing
  • Gold tests higher and then breaks -but bounces once more into 1900 before retreating

New volume shelf at 4212. The pressure for sellers to hold resistance zones near 4220 is high-and they achieved that and now the battle to hold the buyers support region at 4176 is afoot. Buyers need to hold this zone once again near 4176 range as support to confirm the notion that we have broad sideways formations in play. If lost, we could see a fade that is 100 points deep in the ES_F

My MotiveWave platform

When we see news about the bond markets, we need to keep on high alert. And there is quite a bit of news here, though currently subdued as the dollar fades (this is what the Fed wants). Remember that credit rules the world; however, the media shapes the narrative of what is happening, so pay attention to price action first- not what the media is painting.

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

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.

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 larger timeframe. 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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Econoday Calendar for this week

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THINKORSWIM USERS –

Chart share links for ES_F , NQ_F , YM_F , CL_F , GC_F– levels here for download to the Thinkorswim platform

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 have resumed some dominance.

Intraday LONG trading from support edges like ABOVE the RISING VWAP or tight moving averages will give you the least risk event for engaging – removing your trade at resistance will allow you to participate in level-to-level trading – 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 BELOW the FALLING VWAP, the old highs or bigger moving averages will give you the least risk event for engaging. Follow the candle trend until candles stop breaking lower. Removing your trade at visible support levels will allow you to participate in level-to-level trading – understanding that countertrend bounces can be swift and sharp but will likely fail under the broken structure of the market.

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.

DAILY CHART

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