What Happened: Wednesday’s trade built on Tuesday’s response, establishing higher value in the S&P 500, but failed to negate Monday’s end-of-day spike, suggesting initiative sellers remain in control. Sellers extended range overnight, auctioning into the high-volume area that corresponds with the October rally-high.
What Does It Mean: As of now, acceptance of the spike remains intact, confirmed with the market’s failure to trade through the low-volume area beneath $3,580. Adding, the possibility of a failed higher time frame breakout remains, confirmed by trade below the $3,506.25 excess low.
Further, given the likelihood of an open in prior-range and -value, there’s the potential for balanced, rotational trade in an area that represents where the greatest volume of trade took place over the past two days. If the market was to initiate outside of this area, then participants will have conviction to follow-through (in whatever direction that may be).
As a result, participants start the day off with a clear framework; in such case, if price is accepted outside of the balance area, we should be inclined to place trades in the direction of the activity. Otherwise, the market will stay range-bound, favoring short-term, responsive trade.
Levels Of Interest: $3,580 spike, $3,506.25 excess low, the high-volume areas at $3,600, $3,540, and $3,500, as well as the low volume areas at $3,520, $3,575, and $3,608.
Physik Invest 