With a narrow trading range leading up to Wednesday’s FOMC announcement, immediately following the release the market spiked exactly to the previous weekly low at 2079.50. But subsequent 30 minute trading periods failed to trade back into the excess formed above the initial balance high at 2075.50
The market broke out of balance late in the day when ‘M’ period took out the low of the inside bar in ‘L’ period, selling exactly to the prominent point of control from Tuesday.
Spikes are often a good trading reference for the following day, will the late day price probe be accepted or rejected? If the market opens below the base of the spike at 2068.50, price did not auction low enough to cut off selling. If price opens above the spike it is generally positive and leaves a buying tail. Opening within the spike shows acceptance and keeps the downward breakout intact. The top of the spike is resistance.
If the break remains intact, the poor low from 6/14 at 2054.75 is a potential destination trade, followed by the unfilled gap at 2043.75 from 5/23. Above the spike, the very prominent point of control (12 TPO’s wide) at 2072 could act as a magnet and draw price back to it.Share