Market Analysis and Trades for 4/21
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The weekly post and for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to Market Analysis for The Week Ahead
Futures traded higher for most of the night on Thursday night into Friday but came into the open in an active downtrend. During the premarket session, the 5355-5359 weekly level triggered a failed reclaim of 5340-5346 which ended up carrying forward into the open (high of the first 30 minutes was 5340.25and resolving down to 5285.5 which is notably the 4/7 high.
As this spot (and the NQ 18249-18303 range) was key for potentially producing a shorter time frame higher low, it was prudent to cover shorts and consider longs if a re-bid higher low was made.
In this case I favored an NQ long for a potential re-bid off low of day, looking for the 18288-18304 to see this bid. The area was well bid and both indices went on to make new high of day.
Unfortunately for bulls, buyers got a bit offsides back into the 5355-5359 spot (59.5 high of day) in the afternoon. There was nothing about the day to suggest it was going to be a trend day up, so these buyers were entering at rather poor location. Sure enough, these buyers were absorbed and selling really kicked into gear around 2:30 and continued into the close.
This is just one of the many benefits of some limited volume profile. An apparent downtrend break just led to absorption and a failed break that was extremely unlikely to see upside follow through on a day like Thursday.
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