3. Friday's price action in DAX has firmly sent the directional bias of European stocks to the bearish territory. Since the DAX's chart is a bit messy as the price action last Friday was very emotional, we are going to use the FESX chart instead.
As you can see from this chart that the EuStoxx has clearly broken down from a crown top formation. Therefore, we shall seek short setup in European equities so long as the 3406 weekly VPOC being held firm as resistance.

4. Pound is still on the way down to reach for the big targets below. The ultimate prize is the p
ole of the wedge at 1.2850.

The order flow in 6E this morning is quite strange. Seems that only the buyers are active.
And those orders are sliced into tiny chunks of 3 or 5 contracts per lot.
I can barely see any sell market orders.

Is this some kind of accumulation algo?

1. Dollar index has been on the retreat this morning. But Monday is a day that we usually see a counter trend price action and Tuesday/Wednesday making a high or low of the week. The 95 level is still holding firm leading me to stand by my bullish directional bias for this week, which is to say that I expect the closing print of this week would be higher than the weekly open print.



2. This week, the unusual order flow has lead me into a counter trend long, which has worked out unexpectedly well.

3. Among the four major US equity indices, it is the Russell being the most interesting to watch this week as it is in the process of breaking out of a medium term bearish structure. If the reversal in Russell were to get some traction this week, it is likely to print a new high in the near future.

Russell has erased gains in the overnight session and going its own way apart from the three other indices.
Given this failure, it is likely to see more performance divergence between the small caps which is represented by the Russell index and the super major names.

shrekchenbin 

2. This week, the unusual order flow has lead me into a counter trend long, which has worked out unexpectedly well. 3. Among the four major US equity indices, it is the Russell being the most interesting to watch this week as it is in the process of breaking out of a medium term bearish structure. If the reversal in Russell were to get some traction this week, it is likely to print a new high in the near future.

1. Dollar index has broken out a rectangle consolidation range to the upside as I have hypothesized in my prior notes. However, the break out occurred during Asian session, hence i was not able to get involved. Now the gap trading rule applies that we are going to build long position when it pulls back.


2. The bearish scenario in European equities started to play out today. Check out this EuStoxx chart that it has reacted precisely from the fib retracement level.

Today my focus on the day is to identify the state market is in -- market maker buy model or market maker sell model -- before taking any bet.

1. Dollar index has achieved the target that we have identified in our weekend note, therefore, I am not all out bullish on it in the short term anymore. Because technically it is asking for a pullback to restore energy for further upside breaks.


2. For the Euro traders, it is very clear -- just follow the dollar index as the guide. It is very often that the technicals in Dollar index is cleaner than in the Euro itself.

3. European equity has stepped a good fight yesterday that it has turned around the near term bearishness. Today it is under severe test again that it has pulled back and found support at the weekly VPOC at 3376. If this level in EUStoxx were to break, then the sellers would succeed in taking back the control.

Long liquidation day!
Gap trading rule says When gap is not closed quickly, go with the direction of the unclosed gap.
Given the scale of the long liquidation, the most likely scenario is to build a base with volume through time and space at the low instead of V-shape recovery.
Be patient and the recovery is going to come, just it has to consolidate first to absorb those panic longs.

First down side target achieved by running the double bottom weak structure at 2908 left from last week's trading.

shrekchenbin 

Long liquidation day! Gap trading rule says When gap is not closed quickly, go with the direction of the unclosed gap. Given the scale of the long liquidation, the most likely scenario is to build a base with volume through time and space at the low instead of V-shape recovery. Be patient and the recovery is going to come, just it has to consolidate first to absorb those panic longs.

We haven't had so much volatility for a very long time.
It is nearly two weeks ago we had unclosed bearish gap open. But that one didn't result in this amount of long liquidation because the market has been overlapping to the high for a long time now building plenty of weak inventory.

There were three things stick out as the highlight of this trading day:
1. Respect the gap trading rule, especially when the unclosed gap is bearish. Because the long liquidation comes in a much more violent fashion than a bullish market;
2. trading ICT breakers in NQ during the London session is much more effective than in NY session because you can't not have your stop tight enough during NY session. With tighter stops, actually you can trade bigger in NQ and YM without leveling your draw down substantially;
3. There are still setups in Euro and Pound after the NY equity open, but the question is whether you can manage your attention to cover those two.