In my post of the 3rd of June, I suggested we were approaching a correction for US equities owing to a variety of disconnects in related markets, and in particular on the VIX, and you can read the full details here https://wp.me/p1eZB2-3UL. With the correction now underway what can we expect this week, and the short answer is more of the same, and no doubt associated with some wild swings as volatility rises dramatically.
If we focus on the ES Emini, (but all the primary US indices are displaying similar price action), during the course of last week, volume rose as the price waterfall developed culminating with Thursday’s wide spread down candle on extreme volume and volatility which duly triggered our real-time volatility indicator. Friday’s effort to rise on high volume signalled further weakness to come as the big operators sell into this weakness ahead of the next leg lower. And with the index opening gapped down in early trading the most likely downside target is the volume point of control (yellow dashed line) which sits at 2850. However, this level also coincides with strong potential support as detailed by the accumulation and distribution indicator with two strong levels denoted in blue and red.
Moving to the weekly chart this further confirms the technical picture as we have a two-bar reversal in this timeframe and the VPOC sitting at a slightly higher level along with price-based support at 2930 which has already been tested in early trading. Below this further support awaits at 2800 where we have a cluster forming and in conjunction with the VPOC likely to offer a pause point and platform at this level.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
Leave a Reply