Macro micro trader

Its been a while since I wrote my last piece and what a last few weeks were! It has clearly been a sell on rise market and it gets difficult to trade in such heightened volatility. The bounce we saw over the end of last week was not a co-incident we were already looking forward to it (posted quite a few tweets to point this out – here, here, here and here). To follow updates on Twitter: @trojan_manoj2 .

Let’s take a quick deep dive into the charts and understand what lies ahead.

Dow Jones Industrial (YM): The Industrial index has fallen 15.4 percent from top to trough and has bounced exactly off the falling channel support (bull flag). But what is more scary is that it has also broken down off a rising wedge as depicted below.

Based on the weekly and the daily charts, I would expect YM to bounce towards the supply zone of 32800-33200 and then sell-off again. This time, it may not be able to hold on to the bull flag’s support. Although, for now, I would stay focused on the bounce and would be on the buy side until the daily supply comes into play.

Nasdaq 100 (NQ): Just as the YM, even NQ had a bull flag support, which it broke down of briefly, and there came weekly demand area, resulting into sharp bounce on Thursday and Friday of last week.

What lies next is again similar to YM, supply zone of 12,600-13050 along with 20SMA around 13050. One step at a time – Play the bounce until the supply zone kicks in around those levels.

S&P 500 (ES): ES was the only index future that had broken out of a bull flag in March and now had reversd all that breakout and back into the bull flag. What came to the resuce for the bulls is weekly demand zone.

The next step for the bulls is clearing the supply zone of 4130-4260. Thats a big supply zone and it won’t be easy for the bulls to get past of.

Russell 2000 (RTY): RTY bounced exactly off its 1700 weekly demand zone and was able to close past 200 weeks MA.

Next for the RTY is daily supply zone of 1840 (minor resistance) and bigger one in the form of 20 SMA (1880) and low base support which broke down earlier this month – 1920-1930.