After one week of pause, another weekly blog is here. For new readers: I am mostly a day trader, but must always be aware of bigger picture, so large time frame analyses is something that I will do over the weekend, to prepare myself for next week.
Lets see first, what kind of scheduled events we will have.
Most important day would be Tuesday, with Flash Manufacturing and Services PMIs.
Lets move to charts.
Chart #1 - The "Warm-up" chart
Chart to gauge relative strength of each market, and to compare indices between them. Nasdaq 100 clearly a leader there.
Chart #2 - SPX Cash Index Daily
Four day balance above the DMA200. Marked levels of support and resistance, as well as possible targets from this range. German DAX also has four day range, and many indices have the same swing bottom on May 14th, top on June 8th, and pullback bottom on June 15th.
Chart #3 - NQ_F 240 min
Also, pullback bottoms on June 15th are almost always touches of supports (horizontal or trendline), together with Fibonacci retracement. Markets are NOT random.
Some bigger scenarios for NDX were made on last blog, two weeks ago.
No wonder that we had a pullback from upper trendline, as Johnny-come-lately buyers were shaken out.
Chart #4 - RUT EOD
RUT is the weakest. Below DMA200, still in the channel.This index is also more volatile, and often leads up or down - up on trying to catch up for SPX, and down when others are weak.
RUT is number one to sell if weakness is what comes next. And what COULD come next? Next week, other than PMIs, are pretty thin with important events. Still, we are dealing with news driven markets, and marking news driven moves on your charts is also beneficial. Like when Powell said on June 15th that FED will buy corporate bonds. We had a news driven move. Market so far accepted that move. Going below this "Scene of Crime" level, and HOLDING below it, would mean market rejected that. Observe SPX on Chart#2 - this 4 day balance can break up or down, and often before the real break, we get false break first. That is EXACTLY what happened on German DAX.
So, buyers on all markets need to defend swing lows from June 15th, and the news driven move from that day. Markets can stay for more time between June 8th highs and June 15th swing low.
Chart #5 - FDAX 240 min
As written above - markets are NOT random. Channel and halfback formed the June 15th low. Buyers acted in front of the support. Up move of 2,777 points INTO better resistance - around 12,885 level; and from there - 1,388 points down.
Chart #6 - DAX Cash Index Daily
Bigger picture - what can happen upon a break of the 4-day balance? As was written in the Morning notes: Good odds to get a false break of one edge, prior to proper break. Now, market could try to get follow through on the downside.
Price was near lower edge of the range on futures close on Friday. According to IG Weekend (Casino) prices, we can get a gap down on Monday.
Then - lower end of the range (around 12,150) would be a Resistance, and IF that happens, THEN sellers would need to defend that, to stay below this level, below DMA200 - and to try to push below 12,000 and at first to negate the "corporate bonds buying" news driven move, and then to target June 15th low.
Only really bearish thing on all markets would be breakdown of June 15th swing low, and holding below it. Remember to check Daily ATR on all markets, to be aware of daily potential.
Markets moves - as time goes by - tends to be faster and faster.
This tweet and chart from my Austrian friend is a good illustration:
VIX closed on Friday around 35, and we are still in high opportunity, volatile markets. Do not get chopped, wait for opportunities. Do your prep and execute, that is our job as traders.
Snippet from Recap video for Wednesday, June 17th - 23 seconds:
This would be it, for this blog.
IF you want to read some more, check Education, Stories and Rants.
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.