Psych Out.
Flushing at the equator
Image 1. Bear in bull’s clothing?
Day Review
Following a quiet Asian session twice testing the day pivot 4488 before selling into Friday’s POC, the European session opened with no look back. prices pushed strongly into 4406, a level on our radar from earlier. Some two-way trade took place as sellers defended this prior area of downside initiation. A double distribution with healthy buying delta opened at 3995, a point off of our main level.
Buyers wasted little time below and bid up into the ONH where resistance was found. A retest of the open found more wiling buyers for another attempt. However B period peeked only a point over the ONH before momentum completely dried up. Following some buyer absorption, sellers stepped into the vacuum. This is a great example of a ‘look above and fail’ scenario - which has a high probability of a full traverse of the ON range. As well as a high return for low risk.
Image 2. Prior day RTH and ETH profiles
We continued OTFD into E period which broke the ONL. After some congestion and a failure of F period to make new lows, responsive buyers stepped in. This area coincided with Friday’s LVN as well as our pre-market seller target 4374. Prices then rotated to OTFU on mechanical buying into key area 4420-5 where sellers reemerged.
Buyers have managed to close over last week’s 4390 LIS, and going forward they will need to show aggression over HVN 4425 for key weekly targets above (refer to the weekend note). Buyers and sellers have been punished on either side of the major psych level of 4400, the next 100 or so points are likely to come from a break of daily balance from this level.
For tomorrow I will be observing 4411 - representing the July low and the area of break into the 4300s.
Image 2. Market has a memory. Prior levels of interest. Note the near touch of 4378 in RTH.
Landscape and Key Levels
Image 3. 5-day; balance; and daily profiles
Tomorrow’s Missal
From the Missals shared late last week suggesting a swing low was in progress, buyers are now 60+ points up from local lows. Sustained momentum above 4425 can open last week’s poor structure for repair. Sellers will look to defend this area.
Day pivot is 4411. Additionally, watch for VIX to hold 16.75 for seller support. A break of this can help push prices over the zone of resistance.
Buyer scenario. Buyers defending Friday high 4396 or ONLs will look to test 4425 where longer term sellers may step in. Further above are 4447 and 4460.
Seller scenario. Sellers will look to break ONL or a return below 4385. A loss of 4367 can open further levels to 4354 and 4337.
Notes. Home sales at 10EST.
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