Market commentary for 01/28/2009
Good day!
Tuesday gave us very narrow range day. Actually it was NR7 day) narrowest day in last seven days. I believe that most of you know that NR7 bar is always opportunity for trend day and that is what we could follow tomorrow. Unfortunately trading risk won’t be good to us because of FED meeting at Wednesday and that always increase trading risk. Technically we can see on the 60 min charts that triangle is narrower and soon we can expect to see direction. I don’t have strong bias for direction. I think that it is 50/50 right now, but important is to follow pace and volume. That will give us direction. Without that risk will be very highs. Since charts don’t suggest which way we will see it will be smart to leave initial breakout and then take direction with smaller time frame continuation. Example: breakout on the 60 min charts and then follows 5 min continuations (base triangle or flag). Another option is to take trade without market confirmation, but only half size and then add after market confirmation. When I look daily chart my main worry is volume. It is lower on rally and higher on selling and for now it confirm down trend, but if indices will break up from 60 min charts with strong pace and volume then the SPY/DIA will have room for move to 20sma what will be next resistance area. Note that is always higher risk to stay in day trade in to FED announcement, also it is always high risk to take new trade right after announcement, because market reaction can be very whippy.
Good day!
Tuesday gave us very narrow range day. Actually it was NR7 day) narrowest day in last seven days. I believe that most of you know that NR7 bar is always opportunity for trend day and that is what we could follow tomorrow. Unfortunately trading risk won’t be good to us because of FED meeting at Wednesday and that always increase trading risk. Technically we can see on the 60 min charts that triangle is narrower and soon we can expect to see direction. I don’t have strong bias for direction. I think that it is 50/50 right now, but important is to follow pace and volume. That will give us direction. Without that risk will be very highs. Since charts don’t suggest which way we will see it will be smart to leave initial breakout and then take direction with smaller time frame continuation. Example: breakout on the 60 min charts and then follows 5 min continuations (base triangle or flag). Another option is to take trade without market confirmation, but only half size and then add after market confirmation. When I look daily chart my main worry is volume. It is lower on rally and higher on selling and for now it confirm down trend, but if indices will break up from 60 min charts with strong pace and volume then the SPY/DIA will have room for move to 20sma what will be next resistance area. Note that is always higher risk to stay in day trade in to FED announcement, also it is always high risk to take new trade right after announcement, because market reaction can be very whippy.
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