How do we understand that smart money is getting out of their shorts? and how the dumb crowd get trapped into it? Here is the high probable trade setup using market profile which explains the context of inventory getting short to too short and the potential risk in holding trade in line with the emotional players.
Yet another classical technical view on USDJPY as it comes out of the classical 200 Moving average (110.20) with a short covering. The Interesting part is that so far 7 attempts had made to close above 200MA since May 2018 all ends in vain. However current short-covering in USDJPY started with the speech of Peter Navarro, “one of President Donald Trump’s top trade advisors, said the market was overreacting to fears the administration would restrict foreign investment as part of its trade actions against China and other countries,” according to CNBC.
I prefer using classical technical analysis to get a perception about the markets, especially at higher timeframes. Here are a couple of charts on US Market NASDAQ Index (Daily 200 Moving Average Charts, Quarterly – Market Profile, Quarterly ADX Divergence, Quarterly Smooth RSI) with an interesting perception which indicates potentially overvalued NASDAQ charts with a greater mean reversion odds.
Nifty Futures is still not out of compression yet and continuing with the 10600 – 10900 range for July series. More frustration is likely among the trend followers and short-term direction index futures traders. Volatility is flip-flopping. It is always good to recognize this sort of tough game for any kind of directional players that will eventually reduce overtrading.
A stock market warning has just developed for those who are bullish. Here’s what I’m talking about (CNBC, May 22): The House voted May 22 to pass the biggest rollback of financial regulations since the global financial crisis.
One of the reasons we use market profile is to understand the market conditions and how the other players are positioned and what kind of trade opportunity the market conditions provide and where most of the other people are likely to keep their stops. At times the inferred data points from market profile reveal very high probability trade setups with a very good risk-reward ratio. Here is the interesting chart setup from S&P 500 Futures(ES Mini Futures) and the reason why in a short-term S&P500 will fall 50-60 points from the current level of 2792.
Nifty Structure is poor in the last three trading sessions indicates the presence of short-term players. Often short-term players are fickle minded and they have a tendency to reverse their positions at the edge of the balance. On Mondays, Trading session price moved towards the 10820 and 10835 levels followed by price rejection at the top resulting in a poor structure and poor high at the days top. This provides interesting trade setups to fade towards the previous poor structures.
Just like any other Emerging Market currency – USDINR also depreciated since the start of the year 2018. The recent Debt crisis in Argentina, Turkey and Brazil. The unexpected lift in dollar US FED rates made dollar attractive and Emerging markets are witnessing a big EM assets outflow as global investors started pulling their money from Emerging Markets.
Still, Nifty Futures is struggling to find its direction for this month. So far in this series, Nifty went down 10552 levels and no supportive active from the sellers and the price manage to move to the other side of the consolidation band 10800 levels. No supportive action from the buyers at 10800 levels price again rotated towards the center of the consolidation band 10560 – 10800.
Grade 2 & Grade 3 High Probability Short covering Rally/Vertical Long Liquidation is more of a visual pattern which explains why a potential short covering / long liquidation pattern has to arrive when a specific trading behavior is observed. How to Initiate trades, when to invalidate setups and what are the high potential probe zones where the price can be expected to revisit in a very shorter timeframe.
Nifty Pharma one the most hated sector in this bull market for a variety of reasons. The number one reason is negative returns since Apr 2015. Till now index had lost a maximum of 42.28% from its peak. Which is very close to the drawdown during the 2008-2009 crisis period. During 2008-2009 economic crisis period Nifty Pharma had made an extreme drawdown of 44% from its peak.
Poor Structure in Nifty futures that the regular daily structure last couple of days indicating that more of emotional shorter term players are reacting to every tiny news information very emotionally. However, there is a lack of serious money last couple of days keeping the market in a 200 point tight range since 25th May 2018.