Several days back in NL. Both my body and brain still struggle to cope with the working pace as an intraday trader. I could not focus properly to get the morning prep done before my brain gets distracted by some tiny external stimulus or some random thoughts.
Yesterday was such a perfect day for a market profile trader to extract capital from the market that DAX has tested the prior day's VPOC/POC to the tick in a stop run before shooting to a new week high. But I didn't manage my size correctly that I have run out of margin at the ultimate entry of 12965. That could be the trade of the month, but just turned out to be an OK trade.
By looking at the move recent development, it seems that DAX has broken out of a flag formation that it is supposed to make new high like CAC is doing. So far, DAX is still trading with yesterday's value with some positive reaction from the prior day's VAL. But if it fails to break above VAH decisively by the end of London session the market maker would think about a much deeper stop run below the flag formation to clear some floating supply.
In the meantime, CAC is keeping the one time framing to the upside for the 8th day in a row.
I am wondering what could we attribute to this massive divergence in French equity and German equity.
Last week, I was very sloppy in putting down my thoughts into my journals. This week I have to do better.
Today DAX is opened with a bullish gap up. From the pre-open price action, we can see that the operator was loading on longs on in the gap closing move. DAX has found bullish reaction from 13105 a HVN from last week.
This has confirmed that the down leg was merely a test, and the real intention for the operator is to shoot to the upside.
The operator is washing the deck by aggressively dropping the bids after seeing big long market orders hit the tape.
It is crucial for the operator to remove floating supply as much as possible to lighten up the weak long inventory before major mark up.
What a stop run by the evil market maker.
Look at the delta. There are a big amount of speculative long inventory built in the consolidation range between 13070 and 13100.
The stop run has resulted in a dramatic correction in the long inventory removing a major part of the floating supply.
Good job, market maker!
Cac is in a big trouble now.
Look at the market profile that cac appeared to be topped out ending a streak of 10 days one time framing higher.
Given this technical landscape, I would be more interested in shorting the European stocks than taking a long position today.
This new low is manufactured by the algo that it is targeting the stop orders below the prior low.
After making the new low, the buy program is immediately triggered below the prior low.
The algo is drawn to the 12962.5, the prior swing low in H1 chart.
What is it looking for? The stop orders behind that level. No swing trader allowed to be profitable.
Yesterday's massive long liquidation order has triggered a bout of panic selling (or profit taking).
As a result, DAX has traded back to the consolidation range of early last week before break out.
The crash of yesterday might appear to be bearish, but the chart of today speaks of strength to me.
This morning, the operator has tested below yesterday's low and immediately turned back above. It suggests the operator is doing a stop run and testing the supply before a bigger lift.
The key level today is still 12990. If it is able to break above and build value above, then we should buy into all strong held bids.
Market has encountered some resistance at 12990 the level I have mention in the morning prep.
After two corrective down legs, it is ready to move higher now, looks like.
The series of higher lows are broken for the first time. If it breaks 12983.5 level, it has confirmed a bearish rotation.
From then on, short all the rallies after seeing strong held offers.
