This week saw the 2-day reversal into Weekly 50% level, support and then on Wednesday (BUY Day) the market broke the December 50% levels.
December 50% level is now Support with the expectation that price is moving towards 13970 as the first reference point.
As the 3-day cycle and Weekly 50% level guided the market down within the monthly timeframe, the change of cycle along with price trading above the same levels will guide the market upwards.
The market has closed on it’s highs on Friday, so there is a natural expectation that price will rotate back down for two days, or find support above the December 50% levels before the next wave higher.
1 Daily reversal down needs to be verified with support, before trading longs higher the next day from a lower open.
Trading is simply about trading trends, cycles and importantly using support and resistance each day.
Even though the trend of the market has been modeled to move higher, not every day is an UP day, with the 5-day 50% levels the best guide on the strength of the trend next week.
The figure above shows the Daily chart of the DOW cash market:- Each time is gets towards the lows of the past 3-months, the market rises. And again its occurred in November supporting the market and forward modeling suggests it’s going to rise higher in this month.
When we look at the same chart there are the 3-week cycles, just as the 3-day cycles guided the trend down and up within the monthly timeframe, the 3-week cycles guide the trends within the Quarterly timeframe.
When did the last break occur? The Week of expiry….
The closer it gets to December contract expiry the more chance it has of moving higher.
But the question then is:- does it break higher next week (interest rate news, which has been driving each daily rally) or does it rotate down 1 week before rising upwards from a lower weekly open the following week?
Please refer to the Daily report for trading US Index Futures.
