Weekly Charts Reading for 12/18 - 12/22
Plunge proof?
How’s last week?
Pretty much unidirectional market move before & after FOMC rate statement which brought pre-holiday cheer to the market.
#NQ reached ATH, though not significantly beyond the previous ATH.
#YM exhibited a strong breakout above the previous ATH.
#RTY yet to break out of the range since March 2022.
#ES is still in the process of reaching ATH.
#DXY bears regained control from bulls last week.
Support levels identified last Sunday were precisely respected, leading to hitting and surpassing weekly targets.
Check out the four index futures charts with the same levels and ranges identified last Sunday, featuring new candle prints.
How did levels work last week?
Read here how I use this Weekly Newsletter in my daily trading
If you find my content valuable, please hit the like button on Substack and consider sharing the newsletter link on X. Your support through likes, restacks, shares, and reposts motivates me to continue publishing. Feel free to comment with specific questions and suggestions to enhance the usefulness for active traders.
Week Ahead (12/18 – 12/22)
Bullish momentum persists, causing unease among traders due to its uninterrupted rise since the beginning of November.
Active traders on FinX express concerns about a potentially "broken" market, with many indicators and oscillators signaling overbought conditions for the past few weeks.
While a reversal is possible, I prefer to wait for support to fail before adopting a bearish stance, acknowledging the likelihood of a pullback.
Intraday opportunities for short positions can still be considered despite the potential for a pullback.
Bulls' primary objective this week is to safeguard the ongoing rally. This can be achieved through shallower pullbacks and/or maintaining a 'safe' distance from key breakout levels in #NQ, #YM, and hopefully #ES.
Anticipating a combination of these two this week.
Note about levels above ATH
Upside targets are estimated without left-side confirmation on the chart, utilizing a combination of Fibonacci and trend lines across multiple time frames. Feel free to reach out if these levels prove effective; otherwise, your understanding is appreciated.
These levels are subject to refinement as prices evolve throughout the days.
In the event of new highs, prioritizing profit-taking based on risk-to-reward multiples is recommended, rather than waiting for specific target levels to be reached.
Feel free to scroll down to the end of the report to get a rundown on some of the terms I'm throwing around, like "hold," "claim," and “fail”
Disclaimer: This is NOT financial advice. I am NOT a financial advisor.
Events Calendar:
Next week, expect regular economic reports from Tuesday to Friday. Particularly, GDP on Thursday and Core PCE on Friday are likely to introduce increased volatility just ahead of the Christmas Holiday week. Note: When I refer to volatility, I mean the maximum daily price swing, especially with significant fluctuations, not the VIX index
#ES_F / $SPX Futures:
📈 Weekly: cautious 🐂 📊 Daily: Cautious 🐂
Analysis:
Strong bullish week. Even during Friday's muted action, bulls defended key support.
Caution is advised due to the rapid ascent, increasing the likelihood of potential reversals. However, the momentum might drive prices higher before any pullbacks.
Two out of many possible scenarios:
If Sunday OVN 4778 is claimed, an ATH is likely on Monday.
If Sun/Mon price fails to hold 4755, a range of 4700-4760 might precede an upward turn.
If price drops below 4755 to 4747 or 4737 but recovers 4755/4760 quickly on the same day, bulls maintain control.
Even though a close below 4695 triggers an orange flag, a red day close below 4747 is likely to bring more red days.
Monthly Viewpoint:
• 🐂 Bullish Goal: 4770(hit)/ATH
• 🐻 Bearish Goal: Will decide when trend changes on the daily.
Weekly Perspective:
• 🐂 Bullish: If 4760/4755 holds, 4823/4837 in play.
• 🐻 Bearish: If 4755 fails, 4737/4700 in play.
Level by Level Bullish Play (on Daily):
If 4760/4755 holds/reclaimed, targets are 4790/4800/ATH.
Successful claim of 4790 leads to targets of 4808/4814.
Close above 4814 shifts focus to significant milestones of 4823/4837.
Level by Level Bearish Play (on Daily):
If 4755 fails, targets are 4747/4737.
If 4737 fails, consider levels 4732/4718
Failure at 4718 leads to 4700/4695 as downside targets.
Zoomed-out View: As long as bulls hold or reclaim 4760/4755, 4823/4837+ is likely.
🔑 Key Levels:
Resistance: 4778, 4790*, 4814, 4823*, 4837
Support: 4760/4755, 4747, 4737*, 4718, 4700/4695*
Possible Trade Plans:
Considering the analysis and key levels:
Long Trade:
If the market holds 4760, go long with stop loss below 4755, targeting 4778, 4790, 4808.
If the market holds 4755, go long with stop loss below 4755, targeting 4778, 4790.
Wait for a claim of 4790, enter long with stop loss below 4778, targeting 4800, 4814.
If no ATH, and signs of 4747 or 4737 support, go long after 4755 or 4760 reclaimed, with stop loss below 4760/4755, targeting 4780, 4790, 4814.
Short Trades:
If market opens up but fails to hold 4778, short with stop loss above 4778, targeting 4755, 4747.
If market fails to hold 4755, short with stop loss just above 4760, targeting 4747, 4737.
Red Flags:
As market moved up, adjusting flag levels for early detection of short-term trend change:
Orange Flag: A close below 4695 questions the daily uptrend.
1st Red Flag: A close below 4660 on a red day suggests a potential shift in the short-term weekly uptrend bias.
2nd Red Flag: If the market closes below 4610 on a red day, it indicates a potential voiding of the short-term weekly uptrend bias.
#NQ_F / #NDX Futures:
📈 Weekly: cautious 🐂 📊 Daily: Cautious 🐂
Analysis:
Another robust bullish weekly close, above the previous ATH of 16767.
On Friday, bulls defended support levels, hence maintaining a bullish bias.
Caution is added due to the persistent bullish momentum since the beginning of November.
Critical levels for bulls to defend are 16590 and 16575. A failure to hold may question the breakout.
To secure the breakout, bulls ideally want to push the price to a 'safe' distance, estimated around 17020/17245 (not a trading plan).
Early signs of a failing breakout: a red day closing below 16730, followed by a close below 16575, raising bearish confidence.
If 16730 fails and drops to 16670 or 16630 but recovers quickly above on the same day, it signals continued bull control, even after a 100+ points move down and back.
Monthly Viewpoint:
🐂 Bullish target: 16355/16600 (already hit)
🐻 Bearish target: Will decide when see trend changing on daily
Weekly Perspective:
🐂 Bullish: If 16760/16730 holds AND 16880 reclaimed, 16930/17020 in play
🐻 Bearish: If 16730 fails, 16590/16575- in play
Level by Level Bullish Play (on daily):
If 16760/16730 holds or reclaimed, 16865/16880 in play
16880 claimed, 16930 next
16930 claimed, 16975/17020 next
Level by Level Bearish Play (on daily):
If 16730 fails, 16670/16630 in play
16670 fails, 16590/16575 next
16575 fails, 16490 next
Zoomed-out View:
As long 16145/16100 holds/reclaimed, 16600/ATH in play
🔑 Key Levels:
Resistance: 16865/16880, 16930, 16975, 17020, 17057*
Support: 16760/16730, 16670, 16590/16575*, 16490, 16450*
Possible Trade Plans:
Considering the above analysis and key levels, here are some potential trade plans:
Long Trade:
Depending on where the price has been before arriving at 2 key support levels 16760 and 16730, there could be multiple potential trade opportunities.
If the market hasn't hit 16930 and reclaims 16880, look for signs of holding 16865 or 16810 then go long with stop loss below either of these support levels and 16930 & 16975 as targets
Short Trade:
After the market opens, if 16760 isn't yet tested, look for signs of rejection of 16865/16880 on a lower time frame and go short with a stop loss above 16865/16880 and 16760 & 16730 targets
If the market holds 16810 & hits 16865 but rejects it and claims 16810 in a pullback on a lower time frame, go short around 16810 with a stop loss above 16810 and the first target 16760 & 16575 second target
If the market hits 16930, look for signs of rejection on a lower time frame and go short with a stop loss above 16930, with 16880 and 16810 as targets
Red Flags: Keep an eye out for potential signs of a bearish reversal on red days:
As the market moved up, adjusting flag levels for early detection of a short-term trend change as below:
Orange Flag: A close below 16575, the daily uptrend is in question.
1st Red Flag: A close below 16256 on a red day may suggest that the short-term weekly uptrend bias is in question.
2nd Red Flag: If the market closes below 16020 on a red day, indicating potential voiding of the short-term weekly uptrend bias.
#YM_F / #DJI Futures:
📈 Weekly: Cautious 🐂 📊 Daily: Cautious 🐂
Analysis:
A strong breakout from the previous ATH.
Maintaining a bullish bias due to the strong move.
Typically, after such a powerful upward movement, some sideways or downward action is observed, hence caution is advised.
In case of sideways action, bulls ideally want to keep above 37190 to prevent bears from gaining confidence.
This week, 37485 is the critical bull/bear line.
Bullish trades are favorable above, while bearish trades are considered below 37485.
A drop to 37455 and a quick recovery above 37485 will keep bulls in play.
Monthly Viewpoint:
🐂 Bullish target: ATH / 37900
🐻 Bearish target: Will decide when see trend changing on daily
Weekly Perspective:
🐂 Bullish: If 37640/37540 holds or reclaimed, 37880/37965 in play
🐻 Bearish: If 37485 fails, 37310/37050- in play
Level by Level Bullish Play (on daily):
If 37640/37540 holds/reclaimed, 37730/37760 in play
37760 claimed, 37832/37880 next
37880 claimed, 37965*/38010 next
Level by Level Bearish Play (on daily):
If 37485 fails, 37310 in play
37310 fails, 37050/36975 next
36975 fails, 36875/36835 next
Zoomed-out View:
As long 37485 holds/reclaimed, 37965 in play
🔑 Key Levels:
Resistance: 37730/37760, 37832/37880, 37965*/38010, 38110, 38175
Support: 37640/37540, 37485/37455*, 37310, 37050, 36975
Possible Trade Plans:
Considering the above analysis and key levels, here are some potential trade plans:
Long Trade:
Depending on where the price has been before arriving at 3 key support levels 37640, 37540, and 37485, there could be multiple potential long trade opportunities.
If the market hasn't hit 37880 and reclaims 37760, look for signs of holding 37730 then go long with a stop loss below 37730 & 37832 & 37880 as targets
Short Trade:
If 37730/37760 is rejected on a smaller time frame and 37540 hasn't been tested, go short around 37730/37760 and stop loss above 37730/37760 and 37540 and 37485 as targets
If 37485 fails, depending on the actual setup go short near 37485 with a stop loss above 37485 & 37310, 37050, and 36975 as targets
Red Flags: Keep an eye out for potential signs of a bearish reversal on red days:
As the market moved up, adjusting flag levels for early detection of a short-term trend change as below:
Orange Flag: A close below 37485, the daily uptrend is in question.
1st Red Flag: A close below 36760 on a red day may suggest that the short-term weekly uptrend bias is in question.
2nd Red Flag: If the market closes below 36600 on a red day, indicating potential voiding of the short-term weekly uptrend bias.
#RTY_F / #RUT Futures:
📈 Weekly: Cautious 🐂 📊 Daily: Cautious 🐂
Analysis:
If the pattern continues for the past month and a half, expect some cooling off before resuming the upside move.
The Friday pullback from the crucial 2040 level, not definitively bearish, but I consider it somewhat bullish as support held. I anticipate another test around 2040 or possibly 2030. If rejected, and if the support at 2002 also fails, then expect more red days ahead.
In case of a deeper pullback, bulls ideally want to keep the price above 1954/1940.
Closing the week above 2040 is key for any further bullish move to continue, starting with claiming 2040 on the daily.
Monthly Viewpoint:
🐂 Bullish target: 1903/1940 (hit)
🐻 Bearish target: Will decide when see trend changing on daily
Weekly Perspective:
🐂 Bullish: If 2002/1993 holds and 2018 reclaimed, 2040/2061/2095 in play
🐻 Bearish: If 1993 fails, 1977/1970/1954- in play
Level by Level Bullish Play (on daily):
2002/1993 holds and 2018 claimed, 2040/2050 in play
2040 claimed, 2061/2072 next
2061 claimed, 2087/2095 next
Level by Level Bearish Play (on daily):
1993 fails, 1977/1970 in play
1970 fails, 1954 next
1954 fails, 1940/1925 next
Zoomed-out View:
As long 1993 holds or is reclaimed, 2061/2095+ likely to be tested
🔑 Key Levels:
Resistance: 2018, 2040/2050*, 2061/2072, 2087/2095, 2108*
Support: 2002/1993*, 1977/1970*, 1954, 1940, 1925/1922*
Possible Trade Plans:
Considering the above analysis and key levels, here are some potential trade plans:
Long Trade:
If signs of holding 2002 on a lower time frame are observed, go long with a stop loss below 2002 and 2018, 2040 as targets.
If 2018 is claimed, look for signs of holding 2002 on a lower timeframe and go long with a stop loss below 2002 and 2040 as the first target and 2050 as the second.
Short Trade:
If the price hasn't hit 2002 yet and signs of 2018 getting rejected are observed, enter a short position with a stop loss above 2018 & 2002 and 1993 as two targets.
If 1993 fails, depending on the actual setup, go short near 2002 with a stop loss above 2002 and 1977 & 1970 as two targets.
Red Flags: Keep an eye out for potential signs of a bearish reversal on red days:
As the market moved up, adjusting all flag levels up aggressively for early detection of a short-term trend change as below:
Orange Flag: A close below 1970, the daily uptrend is in question.
1st Red Flag: A close below 1905 on a red day may suggest that the short-term weekly uptrend bias is in question.
2nd Red Flag: If the market closes below 1880 on a red day, indicating potential voiding of the short-term weekly uptrend bias.
#DXY / $USD:
#DXY
📈 Weekly: Cautious 🐻 📊 Daily: Cautious 🐻
Analysis:
The bearish pause of the week before last was broken last week, and once 104.210 was rejected, bears continued their move down.
The week closed in red below 103.010, hence changing the bias to bearish.
However, Friday's green close suggests a continued move up to backtest 102.810/103.010, hence caution is added.
If these levels are rejected, bears may continue down to 101.030-
Note that the inverse correlation between USD and #NQ #ES may continue.
🔑 Key Levels:
Resistance: 102.810/103.010, 104.025*, 104.420, 104.560*, 104.870
Support: 102.295, 101.960*, 101.740, 101.030, 100.600*
Green Flags: Keep an eye out for potential signs of a bullish reversal on green days:
Moving down flags aggressively for early warning of a reversal.
Lime Flag: A close above 103.010 on a green day could indicate that the daily downtrend bias is in question.
1st Green Flag: If the market closes above 104.560 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 105.735 on a green day, potentially voiding 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.
Curious about your trading experiences. Share your trading moves inspired by this newsletter – the wins, the almost-wins, and the lessons learned. Drop your insights in the comments below or over on X (formerly Twitter). Let's learn and grow together!
Be nimble and adjust your strategies according to market conditions and the mentioned support and resistance levels. Monitor flag levels for early signs of bias shifts. If you're not following me on X @trdnvestor , consider doing so for daily updates.
May your trade plans work successfully! 💰
Disclaimer: This is NOT financial advice. I am NOT a financial advisor.