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Highlights from December 28th, 2023

Let's observe this day using several charts. This is for Premarket and RTH session of this day.

In the first part of the MORNING NOTES, there was a question: Can there be any surprises?

Why? Because market is in the consolidation phase, after extended run.

#1 Zoom out DAILY INDEX chart:

This IS something to observe for January, but gave some CONTEXT for today as well.

Let's stick to large time frames for a minute here, and talk a bit about ranges.

#2 Zoomed in Daily / Weekly Index chart:

Daily: Outside daily candle, but what were the short / long setups there?

False breaks of Previous Day RTH High and Low. BOTH came with Divergences as well, which you can observe on small time frame charts below. That is something that EVERYBODY needs to be aware of: Previous Day High and Low. Note that a day can have DIFFERENT RTH highs and lows from Absolute high and low, which can be from Futures session. More about sessions is on the About DAX page on this website.

Weekly: Price sill inside previous week range, and CAN stay that way tomorrow as well. Something to observe for the period after New Year.

Talking about setups, what was the idea from M. NOTES, and what happened on SMALL TIMEFRAMES?

Short setup - to catch the HOD was EARLY for most traders, and Gap Fill long FAILED, leaving the dip buyers with the option to Fade Y low (Previous Day Low), which provided three reactions there. Arrows pointing to possible short / long setups in the RTH session.

Example how Gap Fill Long looks like when successful, was shown Yesterday on X, in this thread:

#3 Zones for CFDs chart, 15 min TF

Previous absolute Daily high, and HOD TODAY were made in the Premarket session. Between those, there is Bearish Divergence. On the LOD was Bullish Divergence.

Divergences are handy in CONSOLIDATIONS and RANGES, as additional confirmation. Zone, by itself - as inflection point - is enough.

Additionally, we can use VWAP on Futures, and it is not a bad idea to have real time feeds both for Futures and for Index. Remember that the INDEX is the "mother of all derivatives".

#4 Index and Futures combo chart

There is that Bearish Divergence - which obviously can be seen on Futures as well, and for the pullback to the Zone / Previous Cash close SELL setup, VWAP was a confirmation, OR a standalone reason for taking such scalp, given the weakness from the open, which was COMPLETELY DIFFERENT than the Previous Day, when buyers were on dips entire day, and when we had rejection tails from below, AND LOD was made EARLY in the session.

Remember the sentence from the first part of M. NOTES, shaded in blue?

"Observe the market in the first 60-90 min for confirmation of this expectation, OR for signs of weakness." FIRST HOUR IS IMPORTANT. We got EARLY False break over Previous HOD (in PMKT session), followed by Bullish Setup Failure, and Breakdown Below PMKT range, nobody on the Gap Fill, then Buyers picked the dip to Y low.



In short term trading it is very important to properly understand context heading into every day, to know from which side wind is blowing - who has the short term control, and which side will be forced to liquidate IF and WHEN market hold above or below a certain level. What is the level of volatility, what can we expect from any particular day, what market already done in premarket session, what possible setups can be available, and so on... the things that we constantly learn in the DAILY DOSE OF DAX. 


Cheers, Relja a.k.a. StrayDog

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