I thought it might be useful to do a follow up on yesterday’s post. In that post (which you can read by clicking here) I outlined my game plan for today (Monday). As a quick re-cap, I was looking to trade long after a morning flush down into the 1405 area.
Things didn’t evolve as planned. Instead of a morning sell-off, the market rallied higher into the pre-US session (A). Given this rally, the game plan changes. I was next looking for the market to pull back to yesterday’s high 1412.00 and hold that level, but it didn’t do that.
Instead, it came back deeper to the 1407 level (B). It didn’t bring out much supply and then held there, which allowed for a long trade. The target now has to be small because the market couldn’t hold yesterday’s high, indicating either weakness or lack of buying. Since volume was light, i assumed the latter. I was looking to see if it would trade back up to and re-test the 1416 level (Globex high), but it wasn’t able to rally much through yesterday’s high. Instead, the market just held in a narrow range.
Not too unusual for a Monday. Some days have no volume behind them. In fact, today’s volume was the lightest since early June. If there is no fuel driving the market, it will have little follow though.
Overall, I still view the market as having more strength than weakness, at least for the next day or two. I’d like to see the market hold around its closing level, or flush out down to the 1402-1403 level early in the US session, test the supply from last week and put in a solid higher low. This might be the most positive scenario as a solid rally could develop from this. There are other scenarios, of course. For example, a push up during Globex and then holding around today’s highs would also be positive.
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