Weekly Charts Reading for 10/30 - 11/03
New month, new moves?
How’s last week?
Last week's readings were pretty accurate, you agree?
As anticipated, we witnessed an oversold bounce on Sunday and Monday, reaching key upside target levels. However, fell short of closing above them. Tuesday brought a bearish continuation down to precise levels. The broken Russell 2000 continued its breakdown, and as expected, #DXY back-tested the crucial 105.515 level on Monday before bouncing from 105.360 and continuing its bullish trend.
Like I mentioned last week, we observed a similar pattern on Tuesday this week. Check the daily charts for #ES and #NQ to see what I mentioned below:
If you've been diligently following my newsletter and daily X posts, you'll have likely noticed the critical role that Flag levels play in our analysis. For instance, when the price approaches the Green flag level, which holds particular significance for the bullish case on a daily basis, bulls need to be cautious. If this level is touched and subsequently sees a red close that same day or the following day, it often serves as an indication that the short-term bearish trend is poised to continue. This precise scenario played out just this past Tuesday, offering a tangible illustration of this concept in action.
Week Ahead (10/30 – 11/03)
The major market indices have continued their systematic decline. However, there's a possibility of a bounce early next week. This could be attributed to the need for a break for bears after 8 red days out of the last 9 and potential end-of-month rebalancing as October ends. Significant volatility is expected following the FOMC rate statement & conference on Wednesday.
Factors favoring the Bears:
1. Geopolitical conflicts and macro conditions.
2. Strong #DXY/USD.
3. Broken Russell 2000
4. Fed fund rate & FOMC statement
Factors favoring the Bulls (weakly):
1. Potential oversold bounce.
2. End-of-month adjustments.
3. Indices near multi-month support levels.
4. Fed fund rate & FOMC statement
Is next week shaping up to be a dark day for the markets, or could it be a generational buying opportunity for bulls? It's hard to say for sure. I'll stick to monitoring support and resistance levels to stay on the right side of the market.
Events Calendar for next week:
Next week promises to be busy, with crucial reports and events scheduled for Wednesday. In the morning, we have the JOLTS report, and in the afternoon from 2 to 2:30 pm, the FOMC rate statement and conference. Anticipate significant volatility during these events, with #ES potentially moving 80-100 points on that day and the following one.
#ES_F / $SPX Futures: Where’s the bottom?
📈 Weekly: 🐻 📊 Daily: Cautious 🐻
Analysis:
The bearish sentiment continues to dominate the market.
Last week, we successfully reached the monthly bear target of 4190 and the weekly bearish target of 4120 (4122.25).
The support trend line from March 2020 to October 2022 lows is now crucial for the bulls to maintain.
This can occur in two ways: firstly, if bulls hold 4120 for the upcoming week and trend sideways to the upside in the coming months, or if 4120 fails, bulls might step in around 4065.
Cautious bearishness on the daily chart is present in case of an oversold bounce, especially on Sunday/Monday when no major events are scheduled and given that Tuesday marks the end of the month.
For the bulls to stay in the game, it's important for the month to close above 4185.
Monthly Viewpoint:
🐻 Bearish Goal: 4190 (achieved)
🐂 Bullish Goal: 4515 (not valid anymore)
Weekly Perspective:
🐻 Bearish: If 4120 is breached, the next support/targets are 4075/4065 and 4006.
🐂 Bullish: If 4120 holds and 4160 is secured, we could revisit levels of 4205 and 4225. After claiming 4225, 4270 and 4290/4300 become potential targets.
Level by Level Bullish Play (on Daily):
If the support at 4120 remains intact, a move towards 4160 is probable.
Upon claiming 4160, the next target is 4205.
Achieving a close above 4205 would shift focus to 4270.
Level by Level Bearish Play (on Daily):
If 4120 fails to hold, the targets become 4075/4065.
Should 4075 not hold, the next support levels to consider include 4050.
If 4050 gives way, the downside target is 4006.
Zoomed-out View:
A sustainable bullish bias is not expected until the week closes above 4425, or at the very least, 4225. Until then, 4065 or 4006 remain levels where bulls may have a chance to defend. In fact, it's worth noting that until the week closes above 4425, 4000/3920 could be in play.
🔑 Key Levels:
Resistance: 4160, 4178, 4205, 4225, 4265/4270
Support: 4120, 4075, 4050, 4006, 3980
Considering the above analysis and key levels, here are potential trade plans:
Long Trades:
If the market opens lower but holds 4120 and reclaims 4135, consider a long position with a stop loss below 4135, targeting 4160 as the first goal and 4178 as the second. This trade carries an estimated risk of 10 points for a potential profit of 25 points for the first target and 45 points for the second.
Wait for the market to reclaim 4160. Look for signs that 4150/4146 is holding and consider a long position with a stop loss below 4146. The first target is 4178, and the second is 4205. This trade carries an estimated risk of 10 points for a potential profit of 25 points for the first target and 45 points for the second.
Short Trades:
If the market hasn't reached 4075 yet and bears reject the 4160/4178 levels, assess the setup and consider a short position with a stop loss just above 4185 and a target of 4130/4100.
If the market hasn't reached 4075 and fails to maintain 4120, look for a bearish setup near 4146 and consider a short position with a stop loss above 4152 and a target of 4100/4075.
Please note that these risk-to-reward calculations are approximations and may vary based on entry and market conditions.
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Lime Flag: A close above 4225 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 4305 on a green day, it may suggest that the short-term weekly downtrend bias is in question.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 4425 on a green day, potentially voiding the short-term weekly downtrend bias.
#NQ_F / #NDX Futures: Mercy bounce please?
📈 Weekly: 🐻 📊 Daily: Cautious 🐻
Market Analysis:
Bears are currently maintaining control in the market. However, in the case of #NQ, it's worth noting that the bulls are still tenuously holding their ground.
I would consider the bulls to be still in the picture if this month closes above 14565, or at least weakly holding if it closes above 14245. The upcoming week, particularly Sunday, Monday, and Tuesday, leading up to the Wednesday FOMC rate announcement, will set the stage for the market's direction.
I see two potential scenarios: either a breakdown to 13805 followed by a recovery above 14245, or the market holds at 14245 and completes a backtest of 14565. In either case, a sustainable bullish move is unlikely until a green week closes above at least 14950. Until then, it's advisable to secure quick profits on any long trades, even if they are a few points below resistance levels.
Monthly Viewpoint:
🐻 Bearish Target: 14290 (achieved)
🐂 Bullish Target: 15520 / 15725
Weekly Play:
🐂 Bullish: If 14245 holds, we could target 14405/14680.
🐻 Bearish: If 14245 fails, the targets are 13805/13630.
Level-by-Level Bullish Play (on Daily):
If 14245 holds, the next levels in play are 14390/14405.
After securing 14405, the target shifts to 14480.
Upon claiming 14480, the focus then becomes 14565.
Level-by-Level Bearish Play (on Daily):
If 14245 fails to hold, the next target is 14015.
If 14015 doesn't hold, the following level is 13924.
Should 13924 give way, the downside target becomes 13805/13710.
Zoomed-out View:
A bearish bias will persist until the week closes above 14950, with a focus on 13805/13630.
🔑 Key Levels:
Resistance: 14390/14405, 14480, 14565, 14680, 14855
Support: 14245, 14140, 14015, 13924, 13805/13710
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Lime Flag: A close above 14680 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 14950 on a green day, it may suggest that the short-term weekly downtrend bias is in question.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 15340 on a green day, potentially voiding the short-term weekly downtrend bias.
#YM_F / #DJI Futures: New lows?
📈 Weekly: 🐻 📊 Daily: Cautious 🐻
Market Analysis:
The bears maintain their dominance in the market, closing the week near lows.
Bears continue to seize key levels one after another.
There is no sign of imminent relief on the horizon.
Cautious bearishness on the daily chart is warranted for a few reasons:
the possibility of end-of-month adjustments,
the absence of major events on Monday, and
last week saw the completion of a back test of the March 27 week, from where the initial bullish move that led #YM to its July high began.
Monthly Viewpoint:
🐻 Bearish Target: 32910 (achieved)
🐂 Bullish Target: 34650/34800
Weekly Play:
🐂 Bullish: If 32440/32418 holds, we could aim for 33295/33010+
🐻 Bearish: If 32418 fails, the targets are 32035/31870-
Level-by-Level Bullish Play (on Daily):
If 32440/32418 holds, the next target is 33295.
After securing 33010, the focus shifts to 33205.
Upon claiming 33205, the attention turns to 33420.
Level-by-Level Bearish Play (on Daily):
If 32418 fails to hold, the next targets are 32230/32140.
If 32230 doesn't hold, the subsequent level is 32035.
Should 32035 give way, the downside target becomes 31870/31740.
Zoomed-out View:
Until a green week closes above 33815, it's prudent to assume that the bearish play will continue.
🔑 Key Levels:
Resistance: 32672, 32925, 33010*, 33420, 33815
Support: 32418, 32230, 32035*, 31870, 31740
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Lime Flag: A close above 33010 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 33420 on a green day, it may suggest that the short-term weekly downtrend bias is in question.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 33815 on a green day, potentially voiding the short-term weekly downtrend bias.
#RTY_F / #RUT Futures: Is it time to get out of RUT?
📈 Weekly: Cautious 🐻 📊 Daily: Cautious 🐻
Market Analysis:
It was the lowest weekly close in the last three years for #RTY.
This week's close was below the level of the week starting November 9, 2020, which marked the beginning of the 2020 breakout that took #RUT to its all-time high in November 2021.
The market is currently at a critical decision point.
Breaking below last week's lows could lead to another 100-point drop, but holding at 1640 or at least 1637 and initiating a recovery by quickly claiming 1690 is also a possibility.
Long plays may not be sustainable unless the week closes above 1804, which is a crucial level for a long-term upside move.
Caution is warranted due to the oversold condition and proximity to multi-year support. The key question is whether an oversold bounce can genuinely spark a recovery or if the market will continue to decline.
If the bulls are willing, next week may present an opportunity to observe a weekly two-bar reversal pattern.
Monthly Viewpoint:
🐻 Bearish Target: 1752 (already achieved)
🐂 Bullish Target: 1865/1905
Weekly Play:
🐂 Bullish: If 1640.7 holds, we could target 1676.5/1690+
🐻 Bearish: If 1640.7 fails, the targets become 1598/1537-
Level-by-Level Bullish Play (on Daily):
If 1640.7 holds, the next target is 1658.
After securing 1667, the focus shifts to 1702.
Upon claiming 1702, the attention turns to 1740.
Level-by-Level Bearish Play (on Daily):
If 1640.7 fails to hold, the next target is 1598.
If 1598 doesn't hold, the subsequent level is 1537.
Should 1537 give way, the downside target becomes 1520/1500.
Zoomed-out View:
Until a green week closes above 1804, it's prudent to assume that bearish pressure continues.
🔑 Key Levels:
Resistance: 1658, 1676.5, 1690, 1702*, 1715
Support: 1640.7, 1637, 1598, 1537, 1520
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Lime Flag: A close above 1702 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 1780 on a green day, it may suggest that the short-term weekly downtrend bias is in question.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 1804 on a green day, potentially voiding the short-term weekly downtrend bias.
#DXY / $USD: The Relentless
📈 Weekly: Cautious 🐂 📊 Daily: Cautious 🐂
Market Analysis:
Last week, the bears managed to take #DXY down to the 105.515 level marked by the orange flag but ultimately relinquished control.
Bulls stepped in at 105.360, drove the index to 106.894, and concluded the week on a positive note.
However, there is a sense that the bulls might be fatigued, or perhaps the bears are starting to show interest. This sentiment is based on two observations:
a) While the price moved above the key level of 106.770 from the previous week, it couldn't secure a close above it.
b) Friday's doji candle reflects indecision and hesitation in the market.
These are merely preliminary feelings, and we need to wait for further confirmation.
As you know, I'll be closely monitoring the red day close levels for clues. I've adjusted the first orange flag level upwards, which serves as an early warning of a potential trend change (though not yet a confirmation).
If a red day closes below 105.950, the bears may start to regain confidence.
Similar to last week, if Monday closes below 105.950, the equity markets could experience a bounce, and if Tuesday closes below 105.515, the bounce in #ES and #NQ might persist a bit longer. However, there's no guarantee that this precise scenario will unfold.
If it doesn't, the level to watch is 106.815, which represents the last chance for the bears to intervene. Otherwise, 107.060, 107.275, and a new 52-week high could be on the horizon.
It's important to note that the inverse correlation between the USD and #NQ and #ES continued to hold last week.
Red Flags: Keep an eye out for potential signs of a bearish reversal on red days:
Orange Flag: Until there's a close above 105.515, consider the market to be under Orange flag advisory.
1st Red Flag: A close below 104.420 on a red day may suggest that the short-term weekly uptrend bias is in question.
2nd Red Flag: If the market closes below 104.025 on a red day, indicating potential voiding of the short-term weekly downtrend bias.
Note about Terminology:
In my weekly reports and X (Twitter) posts, I often refer to terms like "must hold," "claim," or "fail." Here's a quick explanation of what these terms mean:
For intraday analysis: I consider the 15-minute or 1-hour candle close.
For trades spanning overnight to two days: I focus on the 4-hour candle close.
For a weekly or longer-term outlook: I rely on the daily candle close.
close above: claimed / close below: failed
These references are also available in the pinned thread on my X profile. I strongly recommend reading that thread for a deeper understanding of my chart analysis. While I plan to elaborate on my methodology in a separate Substack post in the future, the pinned thread on my X profile offers valuable insights for now.
Stay vigilant and adapt your trading strategies based on the changing market conditions and the key support and resistance levels outlined above. Keep a close watch on the flag levels as early indicators of potential shifts in bias. If you aren’t already following me on X @trdnvestor , consider it for daily/intra day updates.
Wish you a profitable week!
Disclaimer: This is NOT financial advice. I am NOT a financial advisor.