The focus of starting this blog was to gain a day to day insight into the movement of the indices and arrive at proper levels to execute trades where the best reward to risk was visible per the principles we follow of Auction Market Theory and the live volume charts called the OrderFlow. We did the same by looking at the weekly chart and seeing the process break up in the daily.
However as I have been saying in our trading room as well as some posts here on the blog, these markets are now moving through with a much higher time frame than otherwise seen in the normal behavior and operations of the market.
Being volume players, who scrutinize this market through the emerging volumes it is easier for us to see the role of the bigger players in the auction as it develops. But even if you are not a Profiler of Volumes , the higher ranges of the daily and the weekly and the elevated vix levels will tell you that we have moved on to a new Normal.
Keeping in mind the emerging picture, I’ll be posting periodically some views of the larger auction taking place and our views on it based again on the concepts of Auction Market Theory.
Our First one is today
Earlier this year my view of 2015 was a flat consolidating 8000- 9100 kind of range . There were visible signs of a top at 9100 for the year and we were amongst the first few people to point out that a tail had been formed as per the principles we follow.
The idea of a rotational market after a selling tail is a fairly normal way of looking and understanding price action and that was the expected behavior.
Then Aug 24 happened and the volume move away of 31 L in one single day from the range was a first pointer to a possible change in the auction. As things stand now the monthly picture shows the Market at 2014 POC near 7520 levels and leaning on it for support.
But the chart above shows that the market is clearly suspect till below 8300 now and that POC near 5900 becomes a magnet for the auction in that case. We all follow Market Profile and understand the power of a Point of Control to attract price to it.
That chart above is the big Picture for the auction.
The Steidlmayer theory I spoke about in the weekly post does allow a 50% retrace of an IPM in which case the possibility of a DD emerging from that auction is also high.
As things stand at the moment the DD formation between 7500- 9100 with a POC near 8300 is still a possibility , but if 7500 breaks on volumes you would know what to expect.
Here is a chart of the BN
The analysis is the same but the volumes in between are more clearly visible in this chart.
I’ll leave you to it.
Will put up some more charts in the coming days.
Trade well, stay safe.