The coming days will determine much of the mid term forecast of the markets! I have already posted about the Wyckoff scheme for the S&P500 and we are only in phase D and the scheme has yet to come to fruition.
There are a few bullish points for the markets here:
- Option traders turned bearish, gamma squeeze could be coming towards the upside
- Mean reversion: the short term mean is above us
- Short term bullish divergence RSI
That all sounds nice but can not ignore the mid and long term bearish momentum that is upon us. I do not believe substantial interest rate hikes are priced into the S&P500, Nasdaq slightly more so - being a more volatile market.
More interestingly is the potential completion of the M pattern, which is a well respected pattern in the S&P500. The neckline is roughly between 4500 and 4600 but a further squeeze towards 4650 can not be excluded. Either we see a consolidation in this zone, we break the resistance or we get rejected. My expectation would be to complete the pattern and get (at least) a short term correction from this area.
This would directly influence the crypto market and further corrections could be coming. However (!), with the next FOMC only in March we could see a green February incoming for indexes across the globe (crypto follows), squeezing puts and calls and favouring more bullish action of traders in the futures and options market. This would imply the real correction coming from March onwards which is - with the the next FOMC announcing a rate hike - not an implausible scenario.
My eyes are on the neckline area here and how the market behaves at these levels together with how the RSI behaves at the 12hr resistance line. A break upwards would possible lead us towards a new ATH, extending the Wyckoff pattern. A rejection at the decline would indicate more bearish action to come.
Either way I stay cautious for price action in the mid term, particularly focusing on the time frame between March and July. It will be Q2 and Q3 that will be crucial for mid and long term projections. What I see are market makers trying their best to flip sentiment and source liquidity from both bulls and bears before starting their mark down phase. A green Monday does not help to cure my hawkish words on the market, Wednesday will tell if there's enough liquidity upwards - yet again, definitely not ideal circumstances for trades with an indecisive market.
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
There are a few bullish points for the markets here:
- Option traders turned bearish, gamma squeeze could be coming towards the upside
- Mean reversion: the short term mean is above us
- Short term bullish divergence RSI
That all sounds nice but can not ignore the mid and long term bearish momentum that is upon us. I do not believe substantial interest rate hikes are priced into the S&P500, Nasdaq slightly more so - being a more volatile market.
More interestingly is the potential completion of the M pattern, which is a well respected pattern in the S&P500. The neckline is roughly between 4500 and 4600 but a further squeeze towards 4650 can not be excluded. Either we see a consolidation in this zone, we break the resistance or we get rejected. My expectation would be to complete the pattern and get (at least) a short term correction from this area.
This would directly influence the crypto market and further corrections could be coming. However (!), with the next FOMC only in March we could see a green February incoming for indexes across the globe (crypto follows), squeezing puts and calls and favouring more bullish action of traders in the futures and options market. This would imply the real correction coming from March onwards which is - with the the next FOMC announcing a rate hike - not an implausible scenario.
My eyes are on the neckline area here and how the market behaves at these levels together with how the RSI behaves at the 12hr resistance line. A break upwards would possible lead us towards a new ATH, extending the Wyckoff pattern. A rejection at the decline would indicate more bearish action to come.
Either way I stay cautious for price action in the mid term, particularly focusing on the time frame between March and July. It will be Q2 and Q3 that will be crucial for mid and long term projections. What I see are market makers trying their best to flip sentiment and source liquidity from both bulls and bears before starting their mark down phase. A green Monday does not help to cure my hawkish words on the market, Wednesday will tell if there's enough liquidity upwards - yet again, definitely not ideal circumstances for trades with an indecisive market.
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
Comment:
Gap up and a few points off my upper resistance with the first red 12hr candle is being printed of the week. Crypto front running the stock market as usual, bearish action incoming? Lets see how the next days will play out.
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