A strong move up has broken the recent balance, outlined on the chart, and came very close to the all time high. This is a momentum move off 2 weeks point of control (7940) that took many shorts by surprise and caused the squeeze forcing them to buy. There are no better buyers than trapped sellers.
At this point we need to watch whether it was one time Friday's deal or this breakout is going to stick. Ideally, the bulls should keep the price up and start moving towards the edge of the projected area which is 100% ext of the most recent balance. The existing all time high is a weak high and it could be taken out easily if the momentum continues. However, if the price starts coming back to the existing balance, 7940 is a big magnet, we may see a false breakout pattern playing which may create a liquidation move targeting 7800 and below depending on the momentum.
Next week the remaining mega tech companies will be reporting, there will be an FOMC announcement, month end - all of those are market moving events. However, there is no need to predict. Watching the inflection points gives some clues where this market could go next.
For now the bulls have priority. Usually, a breakout momentum does not die immediately. The market is in the breakout mode.
Day traders would find opportunities on both sides though.
Stay nimble. Remember that rationality has no meaning for the machines. They are trend following algorithms. If the trend is reversed for whatever reason, they reverse the position and continue to make money. No emotions, no hard feelings.
10/26/2019
At this point we need to watch whether it was one time Friday's deal or this breakout is going to stick. Ideally, the bulls should keep the price up and start moving towards the edge of the projected area which is 100% ext of the most recent balance. The existing all time high is a weak high and it could be taken out easily if the momentum continues. However, if the price starts coming back to the existing balance, 7940 is a big magnet, we may see a false breakout pattern playing which may create a liquidation move targeting 7800 and below depending on the momentum.
Next week the remaining mega tech companies will be reporting, there will be an FOMC announcement, month end - all of those are market moving events. However, there is no need to predict. Watching the inflection points gives some clues where this market could go next.
For now the bulls have priority. Usually, a breakout momentum does not die immediately. The market is in the breakout mode.
Day traders would find opportunities on both sides though.
Stay nimble. Remember that rationality has no meaning for the machines. They are trend following algorithms. If the trend is reversed for whatever reason, they reverse the position and continue to make money. No emotions, no hard feelings.
10/26/2019
