NQ1 !, The rally is at a level of inflection for CME_MINI: NQ1! By SviCapital


Last week’s rally took the price to the monthly R1. It seems that the bulls are in a rush to establish dominance from the start. From a price action perspective, this all makes sense. Ignore the big numbers, as I mentioned in my previous post, numbers mean nothing to machines. Look at the chart from a price action and pattern perspective. The market is fractal . Thinking in numbers only makes things harder to process. The bias, that the market cannot move higher, will come into play. Accepting / rejecting inflection levels is the trader’s only concern. Think like a machine.

There is no doubt that the market is stretched to the upside. If it starts to stall, we could see a big drop. This movement has a purpose: to create fear and force weak hands to sell, to find new buyers who help to raise the price even higher.

Looking at the last day of the previous week. An attempt to raise the price of the monthly R1 did not go well. At this point, there isn’t enough information to tell what happens next. The price is parked mainly at the level of the inflection. The last day was special: NFP and option expiration can distort price action. I anticipate some rest and consolidation around the monthly R1 before the next directional move. Fading the edges of this consolidation would pay off.

Last week there was another gamma compression. The derivatives market (options) drives the spot market. Buying calls forces the market maker to buy underlying stocks.

The expected range of the options market for next week: 16015 – 16670. A good range for day trading.

Good luck!

06/11/2021

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