As mentioned in my analysis for the DXY, based on technical and fundamental analysis, I believe dollar will gain some strength this week as a correction for its recent sell off due to the NFP report. Because of this, equities should see some weakness as a correction then follow up with growth.
US30 has been in a consolidation all week with the possibility of continuing that consolidation until a bigger fundamental catalyst gives it that push. I am looking two things, either a reaction from the order block right above the first set of buy stops then a sell off, or right above the liquidity pool where price briefly broke through on Friday then then a sell off to target one. I expect a reversal at the end of the week, if PPI figures come back good. I do expect Dow and Nasdaq to continue to consolidate for the rest of the week then a rally on Friday.
COT reports that were published on August 31st, show commercials are net SHORT on Dow Jones, and added about 1800 new short positions, while the smaller spec is net bullish..
Potential Bullish Fundamental Catalyst: 1. 09/08 Increased Job Openings 2.Lower Unemployment Claims 3. Less oil inventory 4.Lower PPI, inflation curving down, reduction in government spending package. 5. delay in tapering. 6. Delay in government spending package, delay in corporate taxes, positive sentiment and rising vaccination rates.
Bearish Fundamental Catalyst: 1.09/15 Increased corporate/capital earning taxes. 2. 09/27 3.5 Trillion Government spending package bill (can be negotiated through November)-- possible 5-10% pull back on equities. 3. increased inflation , less job openings, higher unemployment claims, higher ppi figures. 4. Acceleration of tapering. 5. Europe reopening/possible rate hikes and increased vaccination rates rising. 6. Supply and demand issues continue to increase, with increased shortages.
Trade active
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HTF ob hit, will be waiting for a minor bearish movement during asian then a retest to the highs during london and one final retest before NYSE to continue the sell off.
My fingers still crossed to go back 35400.. but at same time, % of that scenario is really low at the moment.
luisilva4001
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Congratulations on selloff!
Do you think will be a further down or once touched +-35060 support he might go back to consolidate and might break a new ATH? Too soon? What are your thoughts.
stimichele
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@luisilva4001, thank you! I do believe this has some more room to go further down. The chart I posted has my first target of which I will be looking for buys at that area since we took out that sell side liquidity, and there is a huge liquidity pool sitting above those highs. Some numbers I will be watching are 35040-weekly OB, 34895-34853-lower weekly OB and my target number. It is in confluence with the 0.70 on the fib and another 4 hour OB. 34458 will be the next target if the intermediate lows are taken out at 34565. I think before it begins to retrace back to the highs, it has to hit that lower target that's on my chart by tomorrow, and then thursday or friday will be a rally day (leaning more on friday, due to a bigger fundamental driver). what are your thoughts? I hope this wasnt the start of a crash LOL
luisilva4001
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@stimichele, I like your analysis, I did believe it won't go below 35040, because it's where my SL is on my long trade. I should have expect this outcome. My bad this time. Makes sense this huge rip liquidy happened. GL!
stimichele
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@luisilva4001, shit happens, just got rocked on another pair too lol. I think it will retrace higher now into London then sell off again possibly during NYSE.
luisilva4001
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@stimichele, "then sell off again possibly during NYSE." Of tomorrow right?
stimichele
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@luisilva4001, yes, but I just looked at my chart and london already hit that low target and made the low, so im leaning on buys right now, hbu?
luisilva4001
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@stimichele, Nice that you anchieved one of your targ, I got out in low profit to.. trading for buys the same.. do you have entry levels to go long?
stimichele
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@luisilva4001, im going to post an updated chart now, but im looking for about 34980-34953, leaning more towards the 980 side. thats if it comes down to retest the lows, if it doesnt then im looking for 35057
update please