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Fake Move As Expected For YM Emini And Others

Published 11/29/2021, 11:30 AM
Updated 07/09/2023, 06:31 AM

YM Daily Chart.

I had the temerity to suggest last Friday that the savage moves in the U.S. markets were likely to be fake given the holiday season. We would, therefore, see a potential reversal, once the volume had been confirmed at the close of the session. This indeed is the case as we start a new trading week following the Thanksgiving holiday. In addition, this short-term-ism is further confirmed with the volatility indicator. So it has been doubly confirmed.

If we start with the price action and volume on the YM Emini, although any of the three indices mirror this analysis, Friday closed had a wide spread-down candle on high volume. However, when we compare this volume with other candles, for such a dramatic move we should expect to see substantially more and, hence, we can conclude this was indeed a shakeout as expected. The market makers were moving in to accumulate additional stock sold off in the ensuing panic concerning a new COVID variant.

In addition, there are two other technical factors on the daily chart we need to consider.

First, we have the volume point of control (the yellow dashed line) coming into play in the 34,700 area. It is acting as a solid platform of support to Friday’s sell-off.

Second, we have a strong area of price-based support denoted with the red dashed line of the accumulation and distribution indicator for NinjaTrader. This describes levels by importance. The thicker the line, the stronger they are. Indeed this level helped to provide support on Friday. We saw the price close just above on the day and, as I highlighted earlier, the volatility indicator triggered signals a move outside the average true range. This was no great surprise. But what we can expect, and are witnessing now, is one of two things: either a reversal or, at the very least, congestion within the spread of the candle over the next few days as traders and investors take stock and reassess the latest virus news.

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