Auction Failure at High

In yesterday’s DTS we stated that odds were relatively low (60%) of converting prior session’s high at 1976.25…An early attempt to penetrate was met by stronger responsive sellers, which setup an “auction failure”…Another failed attempt at the Open Range Rotation Average (1977.00) confirmed resistance. Scenario 2 “failure to convert PDH” was in-play all session.

In overnight trade, price has violated Prior Day Low (1969.25), which further confirms auction failure. Price is currently trading 1962 handle with approximately 160K volume as of 8:00 am.

Today’s hypotheses:

Scenario 1: Today begins a new 3-Day Cycle…Typically Day 1 is weak as price seeks to establish a low point from which build responsive buyers and support. Violation of Prior Day Low (PDL) targets 1961.50 – 1963.50 zone, which has already been achieved in early trade. This zone becomes “key support” for pit session…IF price continues to hold this zone, THEN expectation is for a retracement bounce higher…Initial resistance is 1964.50 – 1966.50 VTMP zone. Key breakdown resistance is marked at 1968 – 1969.50.

Scenario 2: Failure to hold current overnight low (1961.50) suggest buyers are no longer finding value at current levels, which would require further downside probe for value. Violation and conversion of 1961.50 targets 1956.50 – 1958 Xtreme STATZ-Zone.

Trade Strategy: Given the auction failure at high and violation of PDL, trade sentiment has shifted to bearish, and as such our primary trade today will be from short-side on retracement bounces to Key Decision Points (DP’s) highlighted above. If key support levels hold and intra-day shift develops, we’ll play long-side for bounces.

Remain Flexible…Follow the Rules   ALWAYS USE STOPS!

Good Trading…David

Habitude Twelve
I am disciplined. I behave in a way to reach my goals. I do what I intend to do. I have the intent to win through right actions. I will be patient for patterns to emerge and mature. I am decisive. I decide easily and act promptly. I act in the right way and right on time. When there is nothing to be done, I will wait.



Leave a Reply