Of the three sisters, it is the NQ Emini which is the most revealing from a technical perspective on both the daily and weekly chart. And if we start with the daily, yesterday’s price action was not only dramatic but also has implications for the longer-term outlook for equities as, until now, the index has been trading in a channel building strong resistance overhead and oscillating around the volume point of control. This ceiling of resistance is clearly defined with the heavy red dashed line of the accumulation and distribution indicator for NinjaTrader, developing in thickness as each attempt has failed thereby becoming ever stronger hence the significance of yesterday’s breach, with this level now acting as equally strong support.
In addition, yesterday’s wide spread up candle supported with good volume is a clear confirmation of a valid breakaway from the VPOC itself, detailed with the yellow dashed line and the heaviest concentration of volume in the 8650 area. And the further we move from the VPOC the volume resistance on the histogram falls away as we move through the 9200 area, If we can achieve this level in the next day or two, progress through here is likely to be relatively swift with only some minor price based resistance above 9200 then coming into play.
Moving to the weekly chart this gives a clearer picture of where we are heading next and here we have a clear visual on the decline in the volume on the volume point of control histogram as we move through the 9200 area and beyond. Here too we have broken away from the volume point of control on good volume.
With such light volume-based resistance on the histogram to the right of the chart, the journey higher should be smoother provided we see generally rising prices with rising volume. Last week’s candle and volume also sent a strong signal of buying in the market which is being delivered this week in terms of further gains and provided this continues, we look set to retest the 9800 area in the medium term.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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