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market has shown nothing but lack of confidence yesterday. It is quite typical in a bear market that the buyers are feeling insecure by keeping a large position open overnight. That has explained the long liquidation break after a weak false break out in ES. However, the market seldom do the same thing twice and the bears are conditioned to sell into rallies and it is usually the time when the market is going to change.
I am watching a retest of a broken trend line in Russell which might be able to develop into the high to fill some volume vacuum above 1500.
Can you help answer these questions from other members on NexusFi?
Trend line break. The prior break has been confirmed as a false break.
This could be very bearish for Russell.
Once again, Russell is poised to be the bearish leader.
Yesterday was a day of balance in European equities. And today we have a bearish open, which effectively trapped all the longs up in that island of mushroom top. Today I would expect the active support line of 4875 and 4885 would become a resistance. Because the European equities has been firmly in the territory of bear market, what you can do is to load up shorts when it hits the resistance. Take half of the position at profit when it rotates back to support and keep the rest half. Because when it moves to the down side, it could move a big time. Don't miss the big trades to the down side.
A relatively small M top formation in DAX.
The first down side target is at 10800 which has been achieved.
The market maker rarely holds the big figure to the tick. Expect it to run over toward 780 for a bounce.
The second target comes at 10710. I would expect buyers to step in at 780, 720 and 650 which are all high volume nodes built this week. Expect bounces from there.
The support line and resistance lines are drawn in the chart.
Good structure built around 650 support.
With a good structure below acting as support, the big hand traders thus have the comfort to press to the upside.
This is a piece of price action that worth studying for a long time.
Out of the open, a sell program has been triggered in DAX which has lasted for a full hour.
The program has sent the price to the 750 support. After that, there is a decent sized upswing acting like a cheese trap to draw in short term traders.
Then the market maker run the initial low for their stops sitting below the 750 mark and absorb those stop loss orders.
It is meant to clear the weak longs. After that manipulation, the price is drawn to the initial balance high at 10820 and run it over for just a couple of ticks to take profit. What a perfect manipulation in DAX style is done.
I call this setup the diagonal method which happens over and over and over again every day.
ES has found some support from 2615 level during London session. And then it has traded back to the 2625 pivotal zone to find value (balance).
The value low of yesterday 2640 is going to act as resistance once price tests higher.
Note that, there is a bulk of volume being built above 2635 level those are all trapped traders. A quick run into this area of trapped traders is going to be met with lots of supply.
The path of least resistance is to have a sharp mark down to shake out the weak longs.
The likely target is 2595. If it builds too much value below 2600, then it risks a total break down of the year long neckline support the top formation in ES.
It is really a tricky situation for the bulls.
Cac had a head fake above Friday's high and immediately drove to the down side. It is really a difficult market to catch. It is likely that it would take out the 4815 swing to run stops behind it.
Since this week is a FOMC week, the base case for me, like many other traders, is a range bounding market. Therefore, the odds of a spring setup at 4815 is quite high.
If the breaks and continues to the down side, then I would be ultra cautious to follow as it might be a bear trap just like last week.