The EuStoxx50 was under huge pressure last week, but it was eventually able to defend the 3160 major low making a slightly higher low just below 3180.
Today, on the back of strong Asian equity closes, it is working painfully to hold grounds after a bullish open. But clearly there is little willingness for a full bullish break out. Instead it has tested and failed at last week's (volume profile) value area high and is trading back to last week's weekly VPOC for acceptance. I don't expect any significant price discoveries this morning. The European market is settling down waiting for the NY open for direction.

shrekchenbin 

1. Dollar index had a massive failure at the old resistance of 96.10 last Friday, hence increased the probability of developing a running flat formation into the second half of the week, which is saying that it is

1. Before Draghi's press conference, the dollar is whipsawing up and down to clear the weak longs and short.


2. European equity is really getting ugly that the EuStoxx50 has traded below the Oct low, which cleared a major road block to more down sides.

See how exact Pound has hit the 161.8 fib expansion!


This morning an initiative seller was identified at 12995 propelling price towards the 12970 target. When this level is traded through, the initiation point is held to the tick to the other side.

ES is pressing at the 2720 major support.
It is holding so far. But if it were to give away, the equity indices are going to get ugly very fast.

The primary hypothesis is that the leg traded through 2700 major level yesterday is a successful test of the supply. It has created an excess and the down auction is over.
Even though from the TPO chart, it does not look like a good excess. But from yesterday's price action especially when ES has traded above 2720 and 2720 print was successfully defended during London, it has given me enough comfort to take it as my primary hypothesis of the day.

Given this hypothesis, the bias is bullish and I am going to buy retest of the 2732 print. I would hold my bullish bias until the 2720 level was taken out decisively.

Intense fight at 2728 level.
If this level is taken out. The bullish hypo is in jeopardy.

shrekchenbin 

The primary hypothesis is that the leg traded through 2700 major level yesterday is a successful test of the supply. It has created an excess and the down auction is over.

I am monitoring a break of this bearish trend line for a signal for a bullish rotation.

Since Oct. 10th, the volatility in the US equity indices expanded greatly. Instead of stair case grinding higher, the market has giant intraday swings from low to high and then from high to low. Applying buy-and-hold strategy in this market is going to get your account killed. If you are able to think fast and being flex, you actually can make a lot of money in this market by trading technically. Let us talk about what kind of technicals are most effective in this market.

First and foremost is to identify key higher time frame support and resistance in this market by using fib and volume profiles. Due to the elevated volatility, the fib levels are going to be held precisely. Hence you can not put down an order at the key levels you identifies from higher time frame charts. Here the skill set of intraday trading comes in play. One of the key skill is the ability to "identify the dominant market maker model" at that moment.

The theory is based on the fact that the price moves in 4 stages of cycles -- accumulation, markup, distribution and markdown. It holds true not only for the asset price movement over a longer time horizon, say several months to several years, but also in intraday time frame. The essential skill is to correctly identify the accumulation and distribution ranges. Once that is done, the rest are directional price actions. It all sounds easier, however, in practice it is not that easy, because not all accumulation or distribution ranges are actually a flat range. Otherwise, it would be ultra easy. IN reality, the distribution are usually hidden inside of a complex correction combined with multiple stop raids, which makes it difficult for you to hold on to your position even if you have entered in the right direction at the right place.

IN the words of InnerCircleTrader, he calls it "smart money reversal" instead of using the term "accumulation/distribution". I think this phrase captures the spirit of the real accumulation/distribution in action -- it is a war between the smart money and the herd. because the small traders like you and me are not going to turn around a market that is on the move. Only those who are with deep pocketed "smart money" are able to turn the price action around. When they are in action, they want to take money from you.

Enough theory, let us take a look at an example. Last Friday's afternoon NY price is the best example of stair case directional moves after smart money reversal. The smart money reversal are typically confirmed by a stop run. Inside a mark up/down stage, there could be several lower degree smart reversals initiating a counter trend price action of a smaller scale. This is quite typical for a correction where you would see many embedded counter trend price structures.


What is even cooler is that the successful smart money reversals unsurprising happened at the key fib levels of a higher time frame swings. Hence the message for you is quite clear, anticipate and hunt for smart money reversal setups (that is characteristic by look below-and-fail pattern) at the fib level of higher time frame swings.

It is crucial to keep your mind fast and flexible. Because there were several occasions requiring you to react quickly to the market generated information.

The most difficult part is the failed distribution and an ensuing re-accumulation. That re-accumulation has taken a lot of bears by surprised paving ways for a big short squeeze rally lasted for an hour.

shrekchenbin 

Since Oct. 10th, the volatility in the US equity indices expanded greatly. Instead of stair case grinding higher, the market has giant intraday swings from low to high and then from high to low. Applying buy-and-hold strategy in this market is going to get your account killed. If you are able to think fast and being flex, you actually can make a lot of money in this market by trading technically. Let us talk about what kind of technicals are most effective in this market. First and foremost is to identify key higher time frame support and resistance in this market by using fib and volume profiles. Due to the elevated volatility, the fib levels are going to be held precisely. Hence you can not put down an order at the key levels you identifies from higher time frame charts. Here the skill set of intraday trading comes in play. One of the key skill is the ability to "identify the dominant market maker model" at that moment. The theory is based on the fact that the price moves in 4 stages of cycles -- accumulation, markup, distribution and markdown. It holds true not only for the asset price movement over a longer time horizon, say several months to several years, but also in intraday time frame. The essential skill is to correctly identify the accumulation and distribution ranges. Once that is done, the rest are directional price actions. It all sounds easier, however, in practice it is not that easy, because not all accumulation or distribution ranges are actually a flat range. Otherwise, it would be ultra easy. IN reality, the distribution are usually hidden inside of a complex correction combined with multiple stop raids, which makes it difficult for you to hold on to your position even if you have entered in the right direction at the right place. IN the words of InnerCircleTrader, he calls it "smart money reversal" instead of using the term "accumulation/distribution". I think this phrase captures the spirit of the real accumulation/distribution in action -- it is a war between the smart money and the herd. because the small traders like you and me are not going to turn around a market that is on the move. Only those who are with deep pocketed "smart money" are able to turn the price action around. When they are in action, they want to take money from you. What is even cooler is that the successful smart money reversals unsurprising happened at the key fib levels of a higher time frame swings. Hence the message for you is quite clear, anticipate and hunt for smart money reversal setups (that is characteristic by look below-and-fail pattern) at the fib level of higher time frame swings.

YM has touched and rejected from 24720 key level which was the bottom of the consolidation range that has initiated a big sell off. It is likely to be the start of bearish rotation.