SPI is back down into Quarterly support, with the expectation of further weakness down from the next Quarter in April.
However, SPI futures has closed on a Monthly timeframe (last day of the month) below Quarterly support. This isn't a good sign when the Monthly timeframe closes outside a major support zone on it's last day.
This week was disappointing, I was expecting two more days of higher prices into March 50% levels before selling resistance back down into Quarterly support.
Technically everything was pointing to higher prices during the week:- Quarterly support, breakout of the 3-day highs and trading above the Weekly 50% level.
This pattern was an ideal set-up for a continuation upwards into Friday, however as I mentioned last week there was also the prospect of a 2-day reversal down after the change of cycle before the 3RD day moves higher. The only problem was the 2-day reversal was much greater than expected with the break of 3-day lows @ 5553 on Friday.
"As the Weekly timeframe begins to 'tighten' and get smaller, there will be a breakout of the range, which will probably occur the closer it comes to the next contract expiry."
If March is going to follow the trend down with the monthly close below Quarterly lows, then it's going to depend on the Weekly lows @ 5432, with the expectation price is moving down towards March lows....
In conclusion:- break of 5432 and price is heading down.
Support of 5432 and price is swinging back upwards into March 50% level:- this could still occur because of the recent break of the 3-day lows (expectation of a 2-day reversal)
And that's also going to be defined by the 5-day lows:- the 5-day ranges and levels are the most robust view of the SPI within the Weekly timeframe.
Above 5437 and price will close the 'gap' and look for a rotation back towards the 5-day 50% level. And below it's heading lower.
Last week:- the 5-day levels were precise in so many ways:-
Support on Monday (5-day 50%)
Resistance on Tuesday (5-day high)
Support and guide for higher moves into Wednesday. (5-day highs)
Break of Support on Thursday @ 5707 (5-day high) and rotation back down into the 5-day 50% levels.
And Friday open below 5-day 50% level 5608-13 and push down
And on Monday it will be the same :- 5437
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Note:- Those 5-day levels do play a major part when 'day-trading':- trading reversals using swing points and trading momentum (breakouts), however I still use certain techniques to verify support and resistance. This is often using R22 and R44 point ranges (spiral points).
I trade 'longs' from lower points and trade 'shorts' from higher points, and much more valid and robust when those points align with timeframe levels in the market.
On many days these techniques will work perfectly, on other days they won't work because the day becomes a 'trending-day'.
'Trending-days' don't rotate as often within each day that provide entry points to trade the trend. I have a clear view of the markets based on price trading within the Dilernia model by simply using the 5-day dynamic ranges, but I still need a 'spiral-point' to get into the trend.
The past few weeks has been ideal with the amount of intra-day rotation, on Thursday and Friday there wasn't the rotation taking place as before, even though the trend was clearly defined using the 5-day range pattern.
Please read the Daily reports.....
