NQ1!, Breakout is Coming

23 февр. 2019 г.

The multi day balance is quite mature and the breakout of either direction is highly probable. Carefully observing the recent price action the odds are higher for the upside breakout. Almost every session had a liquidation move which was successfully bought and reversed. Friday's action is no exception. The low odds scenario is a balance breakdown. However, the market closed at the top of the balance and the sellers need to move the price to the bottom first. We would need to see that step first. If a potential breakdown move is initiated from the top it usually looses a momentum on the way down and the breakdown tends to fail. There is a lot of energy concentrated at the 7071.25 level and this is the level to watch for a start of the directional conviction. The recent high 7113.75 was made in the Globex session. The RTH sessions usually take those Globex highs/lows and make them RTH levels. That observation increases the odds for the upside breakout. But one need to be nimble. It could be a fast move up and failure.

Despite divergences that many momentum indicators are flashing the market remains very resilient. There is an obvious dominance of the algorithmic trading, almost mechanical so to speak. There is no consideration whether the price is too high or not. The Algos are focused to contain the price above specific levels. For those using market profiles those levels are easy to spot. The 6870 level is an LVN (low value node) with its own POC 7042. This is a line in the sand. As long as that structure is not broken decisively the bulls are in control. It does not mean that the short setups are not available. The markets gives opportunities to both sides every session. However, the short setups are short lived for now. I usually watch for a sign of a failure on 1 min chart to build a case for a potential short setup instead of using a resting order based on a positive expectancy.

There is strong direct correlation between main indices. When a breakout happens it should be supported by other indices otherwise it could be a failed one. The upcoming week should be interesting.

02/23/2019

24 февр. 2019 г.

Заметка

Looking at the weekly chart - there is a strong resistance ahead. So this multi-day balancing ahead of it could be viewed as a foundation to get through that area. This is something to keep in mind. But resistance is resistance until broken and everything may happen. A failure to get through that resistance could be a beginning of the much anticipated correction. The ES is approaching its respective resistance 2800-2820. So we may see some pullback across the indices. Always good to be aware of a bigger picture - it helps to stay on the right side of the chart.

02/24/2019