Stock market dilemma
Should we fear a prolonged conflict or celebrate strong economic data? Morally, both. From a trading perspective, it’s more complicated…
A denial from an Islamic Republic official on state television was all it took to shatter hopes for a quick conflict resolution. Those hopes had been fueled yesterday by rumors of renewed contact between Iranian and American intelligence services.
Oil prices tell the story. The commodity is up 2% to $83 per barrel, serving as a barometer for the situation. Unfortunately, conflict resolution isn’t on the agenda yet.
On the US economic front, the news is more encouraging. The ISM services index came in better than expected at 56.1 versus 53.5 expected. Initial jobless claims also beat forecasts at 213k versus 215k expected.
The retrospective
Buyers got trapped at the open by a false breakout above yesterday’s high [1]. They handed control to short sellers, whose offensive toward the daily pivot point was well underway before being interrupted by the ISM index release [2].
Short covering and new buying interest then sparked a rebound above yesterday’s high. But multiple attempts failed to reach the major target of 49,000 points [3].
My trading plan for today
This content is not investment advice. This trading plan is shared purely for educational purposes to give you insight into how one trading veteran prepares and thinks through the market.
Despite the recent bounce, the underlying trend remains bearish.
Unable to reach their 49,000-point target yesterday despite high optimism, buyers are now trapped. The path is clear for a move back south.
My scenarios for today’s session:
| MARKET CONDITIONS | |
|---|---|
| Side in control | Sellers |
| Side under pressure | Buyers |
| Bull trap | 48915 |
| Bear trap | – |
| Buyers’ target | 49000 (seuil symbolique) |
| Sellers’ target | 47267 (Support 2 mensuel) |
| Buyers’ killzone | 47682 |
| Sellers’ killzone | – |
| Dominant emotion | Hope |
| Emotion score | 8/10 |
- If market above VWAP: mean reversion strategy (scalping)
- If market below VWAP: trend following strategy (targeting 47,682 points)
Good trades!
Maxime holds two master’s degrees from the SKEMA Business School and FFBC. As founder and editor-in-chief of NewTrading.fr, he writes daily about financial trading.
The phony war
Controlled Skid
Peace pipe