Instead of a usual piece on the wider timeframe macro perspective I thought for today I´d narrow it down to give you my first sight analysis and thoughts just for tomorrow and the next few days. While I like to write about the bigger picture economic landscape as it gives me a wide angle framework to think about where the Dax40 and US markets may be heading longer term, it doesn't colour my view for my day trading "job".
Day trading requires a much narrower focus to capitalize on the typical set ups we get everyday and the drivers for these are much more micro price action than macro based. So here's what in my head prior to Mondays open. NB: Sunday overnight price action needs to be taken into account for Mondays set ups but I will deal with that tomorrow morning.
First a little macro to set the scene. From a wider perspective the key to this week will be the FOMC on Wednesday. This will drive US markets into the next week / month and probably set the tone until year end dependent on what Powell says at the press conference. If Dax is to break the lower boundary at 12400 which has been in place since Nov 2020 what happens post the Fed will give us a heads up.
The S&P broke its ascending TL pattern last week which had been holding lower levels since June this year but Dax has not (yet) followed suit and its TL from July remains in tact. A break lower of this TL and the important 12600 S level is the first thing to watch for any lower test towards the critical 12440 level.
Coming back to Monday we still have the Friday futures gap and now 2 cash gaps (12904 and 12956) in close proximity which have as not been closed and could remain as an initial target for any intraday long side price action. At the lower end we have 12700 - 710 which had no H1 closes below on Friday and provided firm support all day.
In addition the range split / pivot I am using around 13050 is an important range based bull bear zone. A break and hold above here moves us back into the higher range, holding below suggests we continue to trade the lower with the D1 trend line, 12600 and 12400 as the lower bounds / targets.
So from an initial framework stand point we have 4 keys levels / areas to be aware of as we start the week.
1 The ascending lower trend line on D1 + the 12600 Support level
2 12700 S area which held Friday
2 The futures and cash gaps at 12904 and 12056 with the futs gap in the middle
3 The range pivot / bull bear zone at 13050.
I will be using these key areas and initial price action as a gauge for "if this, then that" subsequent price action and set ups as we start Monday RTH.
A real time "tape read" is the most critical aspect for my day trading / scalping but its imperative to have a framework to work within. I hope this helps with your own planning and I´ll be diving into more detail tomorrow and every morning prior to the RTH kick off. You´ll find more info here on how you can access my pre kick off analyses here.
Have a good one :).