Interesting week ahead.
Markets have been copping a hammering for the last month but the current set up looks like there could be some hope for the bulls in the short term.
Futures have just opened green and momentum swung back in favour of the bulls to close out last week. IMO this is looking more like a head and shoulders pattern (similar to pattern on SPX that broke down at the beginning of the month)
Below is the ASX 200 (XJO has no available volume indicators so I use OANDA to look at market profiling)
The obvious pattern is quite easy to distinguish although when we look at volume profiles this strengthens the case for a ST move up to continue the 'right shoulder' and also for a rejection around the 7250-7300 region, to ultimately complete the pattern.
As you can see, we are currently trading in the lowest volume nodes within the Value Area - so theres not much traffic to get through to push higher.
But once price hits that 7250-7300 region volume becomes very heavy - with POC for last 18mths around 7300.
POC usually acts as resistance and as you'll see on the next chart there is a cluster of resistance around the same area - making a break above unlikely.
If this pattern played out I'd expect a break on the neckline before entering another higher volume area - which I'd expect to act as both support and an area of chop once hits. This area is between 6600-6850 (current headwinds make this area very likely to be hit)
ASX 200 daily chart below
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Switching over to the actual XJO chart (theres only about 15pts separating) and the cluster of resistance is clear to see with the 50, 100 and 200dMA all around the 0.382 Fib level. Algos will be programmed heavily around here making resistance very strong.
Its also clear that momentum has swung toward bulls with both MACD and RSI flipping to positive on the daily to close out the week. This gives the XJO a decent chance to test resistance mentioned (7250-7300)
XJO daily chart below (closer view)
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Thats it from me. You're all encouraged to have your own opinions but you know mine.
Good luck which ever way you trade.
(20min delay)