Hi All,
The last 10 days have been very exciting and filled with
opportunity on both ends of the spectrum. We broke the high of the year 4 times
in this period and we did it in a sideways fashion. Yesterday we saw a major
reversal of over 60 points and broke multiple resistance levels. For the
futures trader this was a day filled with opportunity. The question I ask
myself is where we go from here. The chart below illustrates the NQ action YTD.
After hitting highs in late January we struggled to get to
the 2778 level in February. Once we did the resistance was pretty steady on
both ends. We hit highs 3 more times and after hitting the high around 2782 we
had a major reversal of over 60 points. There is only a 50 point spread between
the low of the year and the previous low resistance levels in February. I think
in the next week we might test Level 1 low and if that breaks it'll continue to
the Level 2 low and so on. In the short term we might see a relief type rally
and find opportunity there, but I think at some point we will test the year’s
lows.
The Sequester is quickly approaching and we all know how
close Congress likes to cut it. Unfortunately this issue is more complicated
and we are in serious danger of stopping the economic recovery in its tracks.
This is not the only issue facing the market, but this is what I’m monitoring
into next week or two. So, with that said we are traders and I’m looking
forward to the opportunities coming in the next days. The current pull back of
this magnitude and current events we believe are going to add selling pressure
to the NQ. I know this is day trading and we look for hourly signals but an
outlook helps too.
We’ll be looking for the NQ to test Level 1 in the next few
days and if that breaks then we are headed to Level 2.
We would love to hear from you on your current outlook and
what the last few days of price action is trying to tell us.
Love the analysis, couldn't agree any more. Looks like we went all the way to Level 4. Are you thinking this is finally the time to start building a long position after today's close? Do you think Final LOD was put in or if it gets put in later would you just build the long position with stop below Previous Days LOD?
ReplyDeleteThanks Tim. Yeah I think we're going to see a retracement going forward. I would definitely keep an eye on the LOD and have a stop in place. It’s a major support level and I think it will take some serious selling pressure to test it. I was surprised that we even got there that quick, but opportunity was there and we took it. I think you're spot on to focus on building a long position.
ReplyDeleteI was surprised we pushed to that level that fast as well. The market will need to get some relief from this and I think we will since we tested down to those lows and inst. levels. Building a longs position, while becoming risk-free seems like the best move
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