Market Overview:
-
The trading day commenced with an overnight price surge, fulfilling initial bullish targets before a precise reversal from the Money Box Zone.
-
A notable reaction to the PPI release at 3.3% (below the forecasted 3.5%) led to a quick market uptick, reinforcing long positions from the previous day’s strategy.
Key Trading Events:
-
Cycle Day 1 Dynamics: Prices initially sustained above 5875, targeting the 5895-5905 zone, but experienced a sell-side shift, moving back to the day’s LIS (Line in the Sand) at 5875.
-
Bearish Momentum: The market transitioned from bullish to bearish, with bears maintaining control, particularly after the sell-side shift noted at 9:58 AM.
-
Technical Levels: Upper penetration targets in ES and NQ were fulfilled, and attention was directed towards support and resistance zones like 5860-5855.
Terminology and Concepts Highlighted:
-
Money Box Zone: A proprietary indicator for identifying strategic price zones.
-
Spillover: Continuation of previous session’s decline.
-
PKB (Peek-a-Boo): A pattern where price tests and fails at key levels, often signaling reversals.
-
BAVR (Bid/Ask Volume Ratio): Used to gauge market sentiment through volume analysis.
-
Cycle Day 1: Part of Polaris Trading Group’s cycle methodology, expecting certain market behaviors.
Educational Takeaway: The day’s trading emphasized the importance of aligning with the dominant market force. PTGDavid illustrated how recognizing shifts in market control (from bullish to bearish) can guide trading decisions.
Key lessons include:
-
Strategic Use of Indicators: Understanding and applying proprietary tools like the Money Box Zone can pinpoint market reversals or continuations.
-
Adaptability: Traders must adjust their strategies as market conditions change, particularly around significant economic releases like PPI.
-
Pattern Recognition: Recognizing patterns like PKB can offer trading opportunities at critical price levels.
-
Cycle Analysis: Awareness of market cycle days can prepare traders for expected volatility and directional biases, aiding in risk management and positioning.
Looking Ahead: The market’s focus now shifts to the upcoming CPI print, expected to introduce volatility and potentially shift market directions once more. Traders are advised to prepare for significant movements and adjust their strategies accordingly to manage risks and capitalize on opportunities.
PTGDavid’s Final Note: “Stay aligned on bounces” – A reminder to remain responsive to market movements, adapting to the prevailing trend for optimal trading results.