Weekly Reading for 10/9-10/13
What? Another war?
Quick look at last week:
Let's quickly revisit last week's chart analysis and see how my bullish and bearish expectations played out.
Last week, I provided detailed level-by-level forecasts for monthly, weekly, and daily scenarios.
I'm thrilled to report that these forecasts proved highly accurate, hitting the mark at a remarkable 90% success rate.
For instance, in the case of #ES, we identified 4305 as the pivotal weekly level. It held on Monday but slipped on Tuesday, leading to a visit to the next support at 4262. By the end of the day, it bounced back, yet overnight, it came close to reaching our third level at 4230 (the actual low being 4235.5) before staging a rebound.
Likewise, my level analysis for #NQ was right on target. When 14730 gave way as support, my projected target of 14570 was almost reached, bouncing back at 14589. Regarding #YM, while I had 33280 as support, it rebounded from 33004 instead. The bearish scenario for #RTY exceeded our monthly support projection at 1752, eventually finding support at 1720.7.
Turning to #DXY, my call was spot on. I anticipated a pullback from 107.275, and on Tuesday, it hit 107.348 before starting a pullback.
In summary, almost 90% of my bearish scenarios unfolded as expected, and #DXY achieved a perfect 100% success rate.
Let's not forget my Wednesday night daily posts, where I said that if the bulls didn't close their long positions on Thursday, we might witness bears covering their shorts on Friday. That's precisely what unfolded, resulting in an exciting short squeeze rally on Friday! 🚀
Here are the links to some of my posts on X (formerly Twitter):
Friday’s short squeeze ( https://twitter.com/trdnvestor/status/1710309389645599042)
Week Ahead (10/09 – 10/13)
As we navigate the current market conditions, it's important to consider the impact of the conflict in the Middle East and the upcoming earnings season. While it's challenging to predict market reactions with certainty, I will closely monitor the charts and respond accordingly as each day unfolds.
Historically, geopolitical tensions have often led to a strengthening of the USD. Given that #DXY is nearing the bottom of its channel, we may witness some upward movement. However, the clarity of the USD's direction should become apparent by the close of Monday or Tuesday.
It's worth noting that the inverse correlation between #DXY and equities #ES & #NQ is still holding fairly.
Events Calendar for next week:
#ES_F / $SPX Futures: Cautious Bulls look more hopeful
📈 Weekly: Cautious Bullish 🐂 📊 Daily: Cautious Bullish 🐂
Analysis:
Last week, #ES surprised us by bouncing off 4235 (was expecting to it from 4230) and closing above 4335, from where the move to 4235 started.
October's seasonality suggests that the first week's low might be set, but we should remain cautious.
If 4305 or 4285 holds on both intraday and daily timeframes, there's a strong likelihood of retesting the 4500/4515 level.
To maintain the weekly lower low/lower high pattern, 4500 appears to be a key level to watch.
Monthly Viewpoint:
🐻 Bearish Goal: 4190
🐂 Bullish Goal: 4515
Weekly Perspective:
🐻 Bearish: If daily support at 4305 fails, we may target 4220.
🐂 Bullish: As long as 4305 or at least 4285 holds, we're aiming for 4500, with intermediate resistance at 4385 and 4400.
Daily Levels Playbook:
🐂 Bullish Scenario:
4305 holds, 4385/4400 are in play.
If 4400 is claimed, 4448 becomes the next target.
Once 4448 is claimed, the focus shifts to 4500.
🐻 Bearish Scenario:
If 4285 fails, 4262 is in play.
If 4262 fails, 4230/4220 is the next support zone.
If 4220 fails, 4190 becomes the next target.
Zoomed-out View:
Our focus remains on 4500/4515 as long as 4305/4285 holds.
Key Levels:
Resistance: 4356, 4385, 4400, 4448, 4500/4515
Support: 4305, 4285, 4230/4220, 4200, 4190
Trade Plans:
Based on the above analysis & levels here are possible trades I am planning. Similar trade plans can be made for the rest of index futures in this newsletter.
Two Possible Long Trades:
If 4385 hasn't been reached yet, and if 4335 holds and reclaims 4345, consider going long with a stop loss just below 4335 and a first target of 4385, with a second target at 4400. This offers about 40 points of profit for a 15-point risk.
If signs of 4305 holding up on smaller timeframes appear, especially a drop below 4305 followed by a quick recovery, consider going long with a stop loss just below 4285 and a target of 4385. This trade has a potential 25-point risk for an 80-point profit.
Possible Short Trade:
If the price moves down to 4285, pulls back up to 4305, and rejects it, consider going short at 4285 with a stop loss just above 4305 and a take profit target at 4220. This trade offers about a 25-point stop loss for a 55-point take profit.
Please note that these risk-to-reward calculations are estimates and depend on the actual entry and setup.
Green Flags: Watch for potential bullish reversal signs on green days:
Given that last week found support below the previous week of September, flag levels have been adjusted lower.
Lime Flag: A close above 4336 on a green day. Triggered on Friday
1st Green Flag: Closing above 4385 on a green day could question the short-term weekly downtrend bias.
2nd Green Flag: A significant bullish confirmation may happen if the market closes above 4448 on a green day, possibly negating the short-term weekly downtrend bias.
#NQ_F / #NDX Futures: Still the most bullish of all 4 indices
📈 Weekly: Conditional Bullish 🐂 📊 Daily: Cautious Bullish 🐂
Analysis:
The past week met our expectations for a cautious bullish run, closing in green. As anticipated, the real short squeeze began on Friday after surpassing Thursday's high at 14950.
The weekly close effectively nullified the bearish movement observed on Tuesday.
To trigger the 1st green flag level from last week, we needed a daily close above 15150. Although Friday reached this level, it didn't close above it. Therefore, my weekly bias remains conditionally bullish.
The current trajectory appears to be leading towards a back test of 15520, the point from where the recent lower low move began.
Monthly Viewpoint:
🐻 Bearish Target: 14290
🐂 Bullish Target: 15520 / 15725
Weekly Play:
🐂 Bullish: If 15040/14885 holds, we can anticipate 15375/15520 in play.
🐻 Bearish: If 14885 fails, 14600/14460 could come into play.
Daily Levels Playbook:
🐂 Bullish Scenario:
If 14950 holds, we look to target 15150.
Once 15150 is claimed, our focus shifts to 15375.
Beyond 15375, our attention is on 15520.
🐻 Bearish Scenario:
If 14885 fails, we may consider 14730 as the next level in play.
Should 14730 fail, we could target 14600.
If 14600 fails, our focus may shift to 14460.
Zoomed-out View:
Our primary focus remains on 15520 as long as 15040 or at least 14885 holds.
Key Levels:
Resistance: 15150, 15375, 15465, 15520, 15635
Support: 15040, 14885, 14730, 14600, 14460
Green Flags: Change Bias to Bullish on a Green Day:
Given that last week held support as the previous week, flag levels remain the same.
Lime Flag: A close above 14950 on a green day could indicate a potential change in daily downtrend bias. – Triggered on Friday
1st Green Flag: If the market closes above 15150 on a green day, it may question the short-term weekly downtrend bias.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 15375 on a green day, potentially negating the short-term weekly downtrend bias.
#YM_F / #DJI Futures: Bullish hopes keeping alive
📈 Weekly: Conditional Bullish 🐂 📊 Daily: Cautious Bearish 🐻
Analysis:
DJI futures didn't disappoint the bears, aligning with my cautious bearish bias from last week.
However, the bulls showed their resilience on Wednesday and maintained their position, even after a rapid flush following the NFP report on Friday.
Despite the weekly candle being red, the strong green finish on Friday, especially after holding the Wednesday lows, brings some bullish sentiment for the upcoming week. Confirmation would require at least a green day closing above 33710. Thus, I maintain my weekly bias as conditionally bullish.
It's important to note that the bulls remain weak below 34425.
Monthly Viewpoint:
🐻 Bearish Target: 32910
🐂 Bullish Target: 34650/34800
Weekly Play:
🐂 Bullish: If 33280 holds, we could aim for 34425.
🐻 Bearish: If 33280 fails, 33150/33050 might come into play.
Daily Levels Playbook:
🐂 Bullish Scenario:
If 33540 holds, we target 33710.
Once 33710 is claimed, our focus shifts to 34015.
Beyond 34015, our attention is on 34425.
🐻 Bearish Scenario:
If 33540 fails, we might consider 33448 as the next level in play.
Should 33448 fail, 33280 could be the next focus.
If 33280 fails, our attention may shift to 33150/33050.
Zoomed-out View:
Until there's a close above 34425, we assume the bearish play to continue.
Key Levels:
Resistance: 33710, 33940, 34015, 34295, 34425
Support: 33540, 33448, 33280, 33150, 33050
Green Flags: To shift our bias to bullish on a green day:
Lime Flag: A close above 33710 on a green day could signal a potential change in daily downtrend bias.
1st Green Flag: If the market closes above 34015 on a green day, it may question the short-term weekly downtrend bias.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 34425 on a green day, potentially negating the short-term weekly downtrend bias.
#RTY_F / #RUT Futures: Still broken, need some love from Bulls
📈 Weekly: Conditional Bullish 🐂 📊 Daily: Cautious Bearish 🐻
Analysis:
Despite the week closing in strong red, a bounce on Wednesday near multi-month lows, held with Friday's fair close, brings some bullish hope.
While the bears still have control, it's worth noting that this could potentially change in the coming weeks.
Among the four major indices, the Russell index remains the most broken, still in year-to-date negative territory. A shift in this could signal a more stable bullish trend in the broader market.
Notably, the bulls are on shaky ground below 1827.
Monthly Viewpoint:
🐻 Bearish Target: 1752
🐂 Bullish Target: 1865/1905
Weekly Play:
🐂 Bullish: If 1752 holds, we may look to 1825/1827 as potential targets.
🐻 Bearish: If 1752 fails, 1724/1716.5 could come into play.
Daily Levels Playbook:
🐂 Bullish Scenario:
If 1752 holds, we could target 1776.
Once 1776 is claimed, our focus shifts to 1819.
Beyond 1819, we set our sights on 1827.
🐻 Bearish Scenario:
If 1757.8 fails, we might consider 1742/1736 as the next levels in play.
Should 1736 fail, 1724 could be the next focus.
If 1724 fails, our attention may shift to 1716.5/1708.
Zoomed-out View:
Until there's a green day close above 1827 or at least 1775.8, we assume that bearish pressure will persist.
Key Levels:
Resistance: 1776, 1799, 1819, 1827*, 1855
Support: 1757.8, 1752, 1736, 1724, 1716.5
Green Flags: To shift our bias to bullish on a green day:
Lime Flag: A close above 1776 on a green day could signal a potential change in daily downtrend bias.
1st Green Flag: If the market closes above 1819 on a green day, it may question the short-term weekly downtrend bias.
2nd Green Flag: A significant bullish confirmation could occur if the market closes above 1827 on a green day, potentially negating the short-term weekly downtrend bias.
#DXY / $USD : Do bulls need more rest or last week was enough?
📈 Weekly: Conditional Bearish 🐻 📊 Daily: Cautious Bullish 🐂
Analysis:
The bullish streak has finally been interrupted after perfectly reaching the top of the channel.
In the previous week's report, it was mentioned that there might be very early signs of a temporary topping, but no confirmation had been observed.
Tuesday brought real-time confirmation as the local top formed upon hitting the 107.275 target. Wednesday indeed saw a move downwards that continued until Friday.
Despite the move down, Friday's close is not yet confirming a change in the short-term trend.
The $USD is approaching the bottom of the channel. Until it closes below that channel, there's a possibility it will bounce from this point, potentially bringing equities down with it.
If it goes down to 105.800 and reverses, it's likely to back test 106.365 or 107.060+ on the daily chart.
Red Flags: Keep an eye out for potential signs of a bearish reversal on red days:
Since it's still within a strong channel, we'll maintain the same flag levels as last week.
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 (Twitter) . 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 the peace and happiness !
Disclaimer: This is NOT financial advice. I am NOT a financial advisor.