IWM Gap Up and Expected Supports & Resistances

[Billy]

Forum Clusters 110614.xlsx

Interestingly, the market is following the shake-out reversal scenario we discussed in the forum yesterday. The second step for the scenario is that if market makers have now filled their positions at a great VWAP, they will gap up to force the masses to cover their shorts and chase them to the upside. So the key today will be to observe if they are actually facilitating rising prices after the gap up.

Based on current pre-market bids and asks quotes, IWM will likely gap up above MS2 (78.09) and daily pivot (77.92)at the open. Any retracement that can hold at these 2 reference levels will be a most positive sign that the bounce has actually started and could last for more than one day.

The first resistance cluster is easy to beat today up to WPP (78.91). It will converge with the declining 5-day moving average (78.99) so this might mark the high for the day.

A close above QS1 (79.32) would offer a very weak resistance cluster tomorrow with a trend day setup if overnight news and futures are quiet.

Billy

[adam ali]

Billy,

This is a clear, concise and comprehensive trading plan as we move forward today - very helpful. Thanks for the great work.

[Harry]

Agreed. Billy's posts and Pascal's comments of the day are priceless! Really appreciate the effort to educate those such as myself.

[EB]

Agreed, all. Billy, I'm interested in your empirical observations of how trend day up[s] setup ahead of the open. Any particular characteristics of the markets you look for other than what you wrote here?

[Update: thanks. -Bob]

Bob,

Trend days are facilitated by very weak cluster resistances and even more if this characteristic is present the same day on all indices. This will be the case for IWM with a close above QS1 (79.32) and is already certain for SPY with a close above MS2 (128.69) and for QQQ with a close above MS2 (55.19).
I think the charts speak by themselves, just project what tomorrow clusters can be. All support clusters will be strong and all resistance clusters will be weak on all indices. Again, bad overnight news could negate the setup, otherwise the odds are for a trend day up. My definition of a trend day is a move from open to close with a range higher than the 20-day ATR.

Billy

[johnboy70]

Billy,

What does VWAP stand for?

John

P.S. Oddly, enough I'm really beginning to understand everything you say. So, maybe there's some hope for me after all? Thank you very much for your patience and support!!!!!

[adam ali]

http://en.wikipedia.org/wiki/VWAP

[happy]

Billy, thank you again for your excellent comments!

[ilonaross]

@johnboy, or anyone else for that matter.

MIDAS Technical Analysis: A VWAP Approach to Trading and Investing in Today's Markets is sitting on my bookshelf unread and collecting dust.

Anyone interested in an online study group of this book?

Ilona

[Billy]

Ooops sorry I edited your post instead of replying to it. Billy

Bob,

Trend days are facilitated by very weak cluster resistances and even more if this characteristic is present the same day on all indices. This will be the case for IWM with a close above QS1 (79.32) and is already certain for SPY with a close above MS2 (128.69) and for QQQ with a close above MS2 (55.19).
I think the charts speak by themselves, just project what tomorrow clusters can be. All support clusters will be strong and all resistance clusters will be weak on all indices. Again, bad overnight news could negate the setup, otherwise the odds are for a trend day up. My definition of a trend day is a move from open to close with a range higher than the 20-day ATR.

Billy

Attachment 8800Attachment 8801[/QUOTE]

[Billy]

[QUOTE=happy;13457]

Any retracement that can hold at these 2 reference levels will be a most positive sign that the bounce has actually started and could last for more than one day.
QUOTE]

Billy, thank you again for your excellent comments! can you define a "reference level". is that 2 bars or ??

Happy,

Take a deep breath, concentrate hard, read my full sentences slowly, repeat as much as necessary and I'm confident you'll find the answer in your inner self,
Billy