In financial markets, the past is history and the future is always a mystery.
Even though we have had a great month of March so far, it’s pointless to brood over those results, as they will not help our trades tomorrow.I had a few traders who wrote to me saying that they missed this 270 point show, the market put up last week, despite being regular readers here.To them and to several more, the big question would be now whether the market continues it’s uptrend or falls back into the previous bracket.
One day in a market cannot break or make a dominant trend.The idea is always to see continuation or rejection of a new move in the market, in the next session or two.
Let’s look at the profile from Friday :
The lines in the chart are the different value areas, represented by price profile and volume profile methods. Whilst, as a blog and as traders, we are sound believers of the volume profile method and by extension auction market theory rather than the market profile handbook, on a day after the one on Friday, I would wait for the two orders to reconcile.
In an ideal situation for Monday, I would expect the market to consolidate the gains from Friday between 5652/42 and 5690.
Strength above 5690 should lead us to the high volume node at 5714 and maybe to 5728. I will be really surprised if the market auctions over 5728 tomorrow.If we do close up for the day I will still be strongly looking at 5800 before expiry.
On the downside, failure to hold 5642 will mean a dip to the large TPO’s present at 5590. According to our statistics, a visit to the large TPO of the previous day can happen in 55 % of the cases. On Monday that will be possible only on a move below 5642.
After the profile gets completed tomorrow, we should have a better idea of the strength of the longer time frame player we saw in the markets on Friday.
One day at a time.
