Basic Assumptions:
Before I present my TA for your consideration, I would like to state my basic assumptions:
1. Price is efficient. Any imbalance in Price must be resolved before further continuation.
2. There is liquidity, short stops, Between 27,240 – 27,700.
3. The market is designed to play with our feeling and uncertainties.
4. The current short-term downtrend has not been invalidated.
5. Weekend PA is based on retail activity and low volume. Do not trust weekend pumps.
6. The 25,000 level has not been tested. Logic dictates that there is a lot of liquidity there, waiting to be taken.
Deep Dive:
1. Price is efficient: Price moves in the most efficient manner possible. Meaning that every red candle must be balance by a green candle or a wick. On May 24th Price created an Imbalance, Red candle without an opposing green candle or a wick. This liquidity (red box) has now been taken.
2. Liquidity/Short Stops: 27,650 is the range high. We have been in a range since May 11th. Logic dictates that most short sellers placed their stops at the range high. This buy-side liquidity could be targeted to fuel the move to the downside.
3. Emotions: The market is designed to play with our emotions. You may think that the market is bullish and that if you don’t get in now, you will miss a substantial move. However, the market will always give you a second chance. Patience. Wait for the proof of the move before you risk your hard-earned money.
4. Invalidation Level: As mentioned above, the range high is at the 27,500 level, give or take 200$. As long as the range high is not broken, we have to assume that the current trend is to the downside.
5. Weekend: Lets face the facts: Weekend trading volume is usually low, and the PA is not to be trusted. The heavy hitters are not at the office over the weekend. The only people trading on the weekend are retail traders and algos. Not saying that this move can’t be real, but let’s have patience. If this move is genuine there will be further upside after the weekly close and next week.
6. Sell Side Liquidity: If the Market Makers are truly interested in a big move to the upside, they will gather cheap liquidity first. Where is the cheap liquidity? At the 25K level or below.
My Trade Idea:
Entry:
27,400 (Wait for some bearish divergences and/or a clear rejection.)
SL:
27,700 (Could be a bit higher, depends on the entry)
Targets:
25,800 (Range low).
25,200 (Daily support).
24,650 (0.5 fib).
Invalidation:
Weekly close and Monday open above 27,700$
NFA
Patience – Financial Advice.
Best wishes to all.
Feedback will be appreciated.
Before I present my TA for your consideration, I would like to state my basic assumptions:
1. Price is efficient. Any imbalance in Price must be resolved before further continuation.
2. There is liquidity, short stops, Between 27,240 – 27,700.
3. The market is designed to play with our feeling and uncertainties.
4. The current short-term downtrend has not been invalidated.
5. Weekend PA is based on retail activity and low volume. Do not trust weekend pumps.
6. The 25,000 level has not been tested. Logic dictates that there is a lot of liquidity there, waiting to be taken.
Deep Dive:
1. Price is efficient: Price moves in the most efficient manner possible. Meaning that every red candle must be balance by a green candle or a wick. On May 24th Price created an Imbalance, Red candle without an opposing green candle or a wick. This liquidity (red box) has now been taken.
2. Liquidity/Short Stops: 27,650 is the range high. We have been in a range since May 11th. Logic dictates that most short sellers placed their stops at the range high. This buy-side liquidity could be targeted to fuel the move to the downside.
3. Emotions: The market is designed to play with our emotions. You may think that the market is bullish and that if you don’t get in now, you will miss a substantial move. However, the market will always give you a second chance. Patience. Wait for the proof of the move before you risk your hard-earned money.
4. Invalidation Level: As mentioned above, the range high is at the 27,500 level, give or take 200$. As long as the range high is not broken, we have to assume that the current trend is to the downside.
5. Weekend: Lets face the facts: Weekend trading volume is usually low, and the PA is not to be trusted. The heavy hitters are not at the office over the weekend. The only people trading on the weekend are retail traders and algos. Not saying that this move can’t be real, but let’s have patience. If this move is genuine there will be further upside after the weekly close and next week.
6. Sell Side Liquidity: If the Market Makers are truly interested in a big move to the upside, they will gather cheap liquidity first. Where is the cheap liquidity? At the 25K level or below.
My Trade Idea:
Entry:
27,400 (Wait for some bearish divergences and/or a clear rejection.)
SL:
27,700 (Could be a bit higher, depends on the entry)
Targets:
25,800 (Range low).
25,200 (Daily support).
24,650 (0.5 fib).
Invalidation:
Weekly close and Monday open above 27,700$
NFA
Patience – Financial Advice.
Best wishes to all.
Feedback will be appreciated.
