Nasdaq Futures Approaches Major Support Zone

The Nasdaq 100 futures formed a bearish double top pattern on May 4th and reached its downside target on May 8th. However, it is now trading close to a major volume profile support zone on its continuation chart. On the daily chart, this support zone is based off volume between the most recent swing low on March 5th, 2021 and its April 29th, 2021 top. The range is from 12,979.00 to 12,777.75 with the point of control (POC) around 12,850.75. The mid-point of this zone is 12,878.50.

Further supporting this area is the 261/261 Fib extension from the double top pattern and the bearish ABCD pattern at 12,892.75. However, what makes this zone even more impressive is what you see on the weekly chart. It also contains a large volume profile cluster based on the date range from the March 2020 bottom and now. This range is between 13,047.00 and 12,635.50 with the POC roughly 12,741.75. This alone would be enough to take a long position, but there is even more support. We have May’s monthly S2 pivot at 12,694.25 and the upper end of the 34 EMA wave based off the high and close between 12,933.50 and 12,682.75.

I have established there’s strong support between 13,047.00 and 12,635.50 but any long positions should have stops below 12,609.75. That is a big range, so how do we narrow our risk down? First, we can narrow down the zone we would like to go long. I personally like using the 34 EMA wave based on the high, the mid-point of the volume profile, and the POC. If we take those prices, we have 12,933.50, 12,878.50, and 12,850.75. I would look for long entries at those 3 areas. You could use full sized Nasdaq futures, the micro futures, or options on QQQ. All would offer various risk tolerances. The most aggressive target would be the recent top at 14,064.00, but I would advise scaling out along the way if possible.

In summary, the Nasdaq 100 futures contract is approaching a potential buying opportunity with a favorable reward to risk ratio. It will be interesting to watch if prices fall inside this support zone. Look for continued updates on this set-up.


Soybean Meal Enters Support Zone

Soybean Meal soared 61% from late April 2020 into its mid-January 2021 peak. Since then, we have seen prices fall back to the 38% retracement of that rally. This 14% correction has touched the top of a potential major support zone. If you look at all volume traded between April 2020 and now you will find a large volume @ price cluster between 398.10 and 375.10. Inside this cluster is an even larger one between 390.90 and 381.20. This entire zone’s point of control (POC) is around 385.90. Further supporting this area are the 34 EMA wave (weekly chart), the 100% ABCD projection, and a Fib extension cluster. Long trades could be placed inside the 390.90-381.20 zone with stops below 375.10. A trade entered at the POC around 385.90 with a stop at 375.00 would be risking 1090.00 per contract. The largest upside obstacle would be between 417.60 and 424.70. This could be a first target area on any long trades. The recent January high at 471.40 would be the longer term target.

Swiss Franc Nears Support

The Swiss Franc currency had a healthy 12% rally from March of last year into its recent January 6th high this year. However, since peaking last month this currency has now slowly drifted almost 3% lower. How much lower will it go? Let’s check out the continuation chart. Price action is currently trading at the upper end of a significant volume at price ([email protected]) cluster. If we look at all volume traded between the March 2020 low and the January 2021 high you will find the most volume was traded between 1.1037 and 1.0890. This [email protected] cluster has a point of control (POC) around 1.0980, which is the price level where the heaviest volume traded during a specific time frame. Most of this volume was created from the sideways price action between July and December of 2020. This consolidation phase saw prices break to the upside in early December, which shows traders were adding to their long positions. I expect this area to serve as support on the way back down. Other factors that could provide further support to this zone are the 200 DMA and the 34 EMA wave on the weekly chart. I would look for long trades anywhere inside 1.1037 and 1.0890 with special attention to the POC ~ 1.0980. This potential support zone falls apart with a move below 1.0851. Potential risk with an entry at the POC and a stop @ 1.0850 would be 1,625.00 per futures contract. An aggressive upside target on this trade would be the recent high around 1.1441 for a profit of 6,887.50. But there are two large [email protected] clusters to deal with on any move higher, which could be good levels to scale out of any multiple lot positions. Stay tuned for more updates on Twitter.

Crude Oil Ready for Pullback?

Crude Oil has seen a nice rally from its April lows, but it will it continue? Let’s take a look at the continuation chart. Prices are currently trading inside a large volume @ price cluster between 51.00 and 57.40. This cluster formed during the downwards move off the October 2018 high when it traded sideways from December 2018 until February 2020. This could prove to be an area of stiff resistance. Friday saw the first sign of weakness since entering this zone on January 7th by forming a bearish engulfing candle. This also formed near January’s monthly R2 pivot point. Prices are also a bit overextended compared to its 34 EMA wave. I think we could see a correction back into this area between 47.30 and 49.10. This area also contains another volume @ price cluster that could provide further support. Let’s watch how the next couple of weeks unfold.

30 Year Bond Futures

The 30 Year Bond futures have reached an interesting area today. Price action found support at previous support from 6-16 and 8-28. Also, it found support on its VSCORE (measures standard deviations of VWAP anchored to 9-2-19) at levels of previous buying. Large Traders are also holding record short positions, which is bullish. Finally, this market could be forming a minor low pattern. If we get a push above 175 3/32, then we could see upside follow through. The resistance test would come between 175 12/32 to 177 24/32. Sometimes it can take just a few days for the COT extreme to play out. Sometimes it can take weeks. Either way, this is a market worth watching for more upside.

Check out my first tweet on this market here.