Pre-open Thursday 4th February
No follow through from the Buyers on Wednesday. The Value Area was narrower (within Tuesday’s) and volume contracted – typical of a market printing close to a major poc (1094). In fact Wednesday’s poc was at the same level. The 8day poc (current range) migrated to 1097 and this was resistance p.m.
Because the last imbalance was Buying (green) I am reluctant to short (as you know green-at-top highs are usually tested) but my feeling is that the 1066 low will be tested. Once again, the more time spent below 1094 (maybe around 1085) the greater the chance that will happen.
ST sentiment indicators: My version of the Rydex Assets ratio was slightly higher again, to 1.94 and there is still no sign of increasing fear in the VIX which from a contrarian pov is not bullish here.
