Last week price action can be described in one word – WOW
Intraday Heaven or Hell with DAX all over place, maybe a bit confusing and difficult to trade but same time rewarding, thanks to very wide swings in price, day traders focusing on delivery positions between extreme price entry’s had opportunity to book great profits.
Not best situation for any one, who decided to enter and hold no matter it was short or long as market beat open price and highs / lows few times this week.
Monday drop over 350p then some recovery then whipsaw for rest of week with market slowly edge lower.
Wide swings rest of week as outcome of large volume traded in thin market.
Over all sellers make point this week and hit targets 11380/30 and get very close to key support level 11200
Last week setups: https://www.tecet.net/?p=1534
Lets think for moment not as Trader but as Market Maker, what You would do if You could control price movements?
We have long last Bearish trend, price beat many important support levels and erase over 1y gains. We have ahead another key support, current lows near 11k and 10.830 zone. That price tags are TP for so many short positions creating thick floor of orders.
As Market Maker which I’m of course interested in such liquidity clusters would I deliver price there in one go? How much my own portfolio I could liquidate in that zone or just fill coffers any one else garbing just small fraction of that? Can I control price action on that levels? No. Not much.
So if that move is very risky for my self isn’t better to take profits above, take as much buy orders until there is demand from shorts sellers, adjust my risk and rally against weaker retail short position, forcing them to cover, tarp them and use panic to lift markets smooth and fast with just little effort. That make more sense?
Also below we have hard battle over scraps with long term holders which will defend many years old uptrend, where above easy money just waiting to be taken.
That can be answer for unusual wide swings last week as market makers adjusting holdings in short positions, taking profits and accumulating long orders for rally.
Strong rally can help to clear out orders floor below (October lows and 10830) and if there will be opportunity later or next year to retest 2018 lows or push further will be much easier after shorts get shaken out.
For achieve that goal, good rally is 11760/850 and extension 12150, that levels still not breaking long term short setup but will clear out retail and make room for more fresh positions to reload.
Danger for shorts sellers is only if that correction of bearish trend can become hijacked and option for bullish rally and setting new ATH trigger if geopolitical and economy events improve.
What to watch next week:
UK/EU deal – after some drama, UK all ready sorting it self internal and will be ready to challenge media bias and apocalyptic propaganda from EU remain supporters. Forget another referendum or lost power from PM, deal will be done and in interest of EU and UK is to get it done ASAP.
Thanksgiving US – interesting period, usually rally stocks, people appreciate all ready closing year, Christmas soon, prices are good and every one just can’t wait for Santa rally.
Black Friday – market lifter wit massing spending every year, huge opportunity for retail sectors which like for example Amazon will benefit from that.
G20 meeting and US/China deal. (end of November / early December) To the end we will see power play, tweets from Trump / media and government announcements to build impression of strong position for better negotiations. Deal must happen and even just friendly hand shake and door open for further talks after new year will make market explode, relief rally most welcomed.
Fiscal year close. Institutions, Hedge Funds, large traders, all very busy ready with adjusting portfolios for year close. Shorts was the winner since summer time, so that holdings have to be adjusted and good bargains all over place to long term buy and hold.
Combination of that events can be huge factor for down trend correction and all played out positive for great end of year rally.
Lets be ready for that!
That action will affect Indexes in global scale not just DAX and EU.
Example of SP500 setup:
Technical analyse and next week setups:
Buyers will be working on defend key support level 11200 and create breakout action, orders accumulated at lows and during last 2 weeks to be delivered above 11760 and 12150 on extension. Price action at key support level and below will be seen as buy bargain.
Good chance as Friday Low 12220 become as confirmation of support, setting new higher low and become beginning of rally.
targets: 11690 and 11760 then 12150 / 12300 as extensions
Resistance: 11430/520 then 11650/90. Key resistance at 11760/850 and 12150/300
Zoom in on last structure 4h chart and on left example of similar price action from past:
Last chance to suppress rally / breakout attempt. Push for retest of October Lows and force buyers to retreat under next key support level at 10830. Down trend line barley but caped last rally and we have structure which can create good push lower if breached.
Targets 11200/150 then October lows and 10830/560 in extension
Support: 11200 and 11330/70. Long term key support 10830
Tricky situation for shorts and can end up as fight for scraps so short sellers preferable setup is to cover positions under 12k, take profits and come back at 11760/850 and 121500 for even better action.
Long term retrace situation:
Market working hard to save Fib 50 retrace and remount weekly MA 200, we have few retest of that key points so still not clear clue from that but must be watched.
Remounting and defending MA200 will give us strong rally pushing thru Fib 38.2 with target MA100 / Fib 23.6
Decline = danger of pull back lower to Fib 61.8
Daily Chart Zoom
Resistance / Support