Topic of this Weekly Blog will be Acceptance and Rejection.
1. Scheduled data for the next week
Nothing on Monday/Tuesday, and nothing much on Thursday/Friday.
It all comes down to Wednesday - which is FULL of important data releases, starting with FLASH PMIs from France, Germany, UK and US, Eurogroup Meetings; OPEC-JMMC Meetings; and finally FOMC EVENT: FOMC Economic Projections; FOMC Statement and FOMC Press Conference to finish the day.
2. Charts and thoughts
Reminder from last Weekly Blog:
Starting with the Weekly chart.
No acceptance above Resistance for the past 3 years.
Just to put things into perspective and to clarify how exactly the Acceptance above this Resistance SHOULD look, lets observe the Monthly chart as well:
Upper range is almost the same size as lower one.
(Aha... but but, that means that concept of 100% range expansion could be applied to ALL timeframes... hmmm....But hey this is a bit off topic now, and you can check this in a 2 min video, below)
BACK TO ACCEPTANCE AND REJECTION
Breakout was made in 2013... and tested in 2014. Price accepted above former Resistance, that now acts as Support. Re-tested in 2020, an rejected from the bottom edge of the new range. Before that, rejected from the upper end of the new range as well.
Price spends much more time building ranges, than in trending. Building ranges on top of each other in up trends, or below each other in down trends. But also making OVERLAPING ranges, like we have now, is slower environment. Finally, something happened on Friday, and price have tested 13,000 - something that was visible on our charts for weeks.
Next chart is SIMPLE Daily chart with levels and Fibs
And on every single Fibonacci retracement of the latest swing up move, we have the confluence of another reference.
CONCLUSION: December is seasonally bullish period for the stock markets.
BUT bulls need to hold 13k area now, since break below that, and we could see 12,700 and fast. As written on the chart above - RED FLAG on HOLD below 13,000... and Road To Hell below 12,700 - which is also ~38.2 Fibonacci retracement of the entire up swing.
Bears need to make a breakdown below 13,000 and to try to negate the Pfizer news driven move from Nov 9th. That was "buy the rumor" and now we could have "sell the news", especially since 13,460 Resistance is unbroken, and price was REJETED from there.
So, now the most important inflection points are 13,000 and 12,700. Above 13k important ones are ~13,220/230 and 13,460. Unfilled gaps above 13k are 13,296 / 13,494 / 13,579. Below 13k: 12,646 / 12,480 / 12,324 / 11,788 and many more.
Better moves came after breakouts / breakdowns... However, price can just stay in the range - and I know, nothing is sexy about it, but trading in general is NOT sexy, or exciting or glamourous. It is rather boring, and repetitive - like many other businesses. We have slow days, we have good days, ranging and trending... "low opportunity market" and a "giving market".
Reminder about low opportunity and giving market:
We had a "giving market" on Friday. USE THOSE DAYS.
ONE of the screenshots from Setups Gallery, for Friday, Dec 11, 2020
Gap down and go, breakdown, expansion of the range, exhaustion INTO LTF Support, bounce, pullback - ALL was there on last Friday.
Again - use good days for making profits, be careful in slow and choppy days, and be aware of the bigger picture. Big moves takes TIME to prepare and to develop. Observe tempo and momentum - since without them, we are back to zone-2-zone trading.
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