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Broken Support But Buyers Fight- Sept 14, 2021

MARKET OUTLOOK -BROAD BULLISH STANCE still holds‘buy the dip’ is still in force for the power players- the largest stocks holding up in the markets. Yesterday morning, we broke the edge of resistance only to fall right back to support and we have been battling at 4455 for what marks our third trading day. A break by time (which holds both support and resistance in place) in a downward trend, tends to revert to the downward trend. #STAY FROSTY

A deeper reversion to the mean may be on approach. This region near 4526 is still key resistance with support near 4456 and 4435 -with 4412 below. Earnings trickle but the majority of releases are now over and we should see a lull between now and the fourth quarter beginning in October. Caution ahead – patience required. Candles are still retracing each other (both big and little time frames) so use this piece of knowledge to stage your entries. Pullbacks are still buying zones, but they are likely to be deeper.

TRADING NOTES –

*START WITH BIG TIME FRAMES TO FIND THE LEVELS THAT GIVE YOU AN EDGE

*GO TO SMALL TIME FRAMES BEFORE YOU TAKE YOUR TRADE

*LET THE PRICE TELL YOU THAT IT IS NOT GOING LOWER IF YOU WANT TO TAKE A LONG TRADE OR LET THE CHART TELL YOU IT IS NOT HEADING HIGHER IF YOU WANT TO TAKE A SHORT TRADE

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THIS WEEK’S WEBINAR LINK

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Observations

  • PPI data ahead
  • Beige book yesterday holds markets down
  • Global funds bought record number of US Treasuries once again
  • Oil rises, falls and rises again
  • Supply chain issues creating the bottlenecks and driving inflation
  • Copper bounces from 3.90 to 4.36
  • Soft commodities mixed – support tests across
  • Bifurcated markets remain the order of the day -mixed participation
  • Gold holds 1800,tests 1836 and rejects on US dollar holding the 92 region
  • Bitcoin breaches 50K and holds before fading sharply into the 43K region and holding just above

Support holds across the board with broad views show reversion to the mean on the broader landscape. Mixed markets grinding sideways in the near term overall

When we see news about the bond markets, we need to keep on high alert. And there is quite a bit of news here in the current news cycles, and traders are very mixed in what they think is ahead in the macro landscape. 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.

THE POWER OF THE OODA LOOP AND ASKING QUESTIONS ABOUT THE ENVIRONMENT BEFORE WE ENGAGE

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 -is my trend in continuation or do I see signs of a reversal motion?
  • Where were the buyers last engaged if they were value buyers?
    • This means -is my price action far from the last region that value buyers engaged or it is in that congestion?
  • Where were the sellers last engaged if they were value sellers?
    • This means -is my price action far from the last region that value sellers engaged or it is in that congestion?
  • Who won the last strategic price battle- buyers or sellers? This answers the big question of trend
  • Have we tested significant levels of support or resistance? This answers the question of whether we are near a critical pivot
  • What is the relative trend?
    • This means – relative to the day at hand, who is forcing the most pressure on price? Look at your moving averages to tell you this
  • Have you established risk relative to-
    • 1) the last battle won and
    • 2) the relative trend? This answers the question of how far you are away from strong support or strong resistance

PAY ATTENTION TO YOUR STOPS.

Let the VWAP 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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THIS WEEK’S WEBINAR LINK

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Register using the highlighted link above to join us for the entire week

This week’s calendar

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.

Levels remain largely the same

LINK FOR THE TRADING DATA EXCEL SPREADSHEET

Video to describe how to read the spreadsheet

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 longer 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. This means that your trades in the opposite direction of trade flow will need to be quick

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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