TO understand the US Market today, you need to step back a few days.Weakness was noted, and PA was hitting resistance around 1405-1407. The thought is: before a new leg higher could develop, a pullback would be seen. The outlook was to the 1370-1345 zone. The reason for this seems simple enough. Money will enter at a better buy price, thus the PA moves to that point. This usually finds some news seemingly supporting the move lower. For shorting, the reverse action occurs: PA moves higher then dumps. The "news" is merely the smoke to get the desired entry points, and usually creates the desired greed (PA higher then dump) or fear (move lower then bounce) in the general market players.
Here is an example: Markets moving higher then news hits concerned about Dubai payments. Odd; wasn't the previous news to get the push higher positive on Dubai? PA retracts and ding, new buying. Back to the positive spin on Dubai will have no problem making the payments. Spring forward, and you can insert Greece, Italy, and so on.
Euro Zone
The ES was tame entering the Euro Zone trading. The Short Bot (SB) held and we had a nice range run and Long Bot (LB) test and follow through BO. We see a nice range run channel develop when the BO-5 failed(i.e. failed to reach 1398). The expectation on a BO is a run to the BO-5 and if this fails, we tend to see a reversal run to the opposite BOT. Another BO at the SB and it failed the BO-5 test, but was finding resistance at the US Open. This information was a critical piece in playing the US trade period. By bar 9-10 we have a buy signal . This is below the BO-5 level, yet PA selling in bars 7 & 8 could not reach BO-10.
PA could fail the 50CB level and continue lower. With the MAXT at the 50CB it seem favorable, but B13 reversed the MAXT and was a valid conservative long. Earlier longs at b9-10 simple were going with the market mode that the best plays today would be the range runs, not extended BO's. This philosophy paid well today with the BOT Ranges.
PA around b34 broke the bullish buyer TL,, and had trouble breaking the EMA/SB support. A new buy TL developed leading to a challenge of the LB. The gap in PA(see box) holding around the EMA and above the SB was also bullish and would likely create another challenge of the LB. Day done.
At the end the book clearing did get late day traders a LBBO.
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