This Week’s Economic Calendar
Ho, ho, ho! The holiday season is finally upon us, and I want to take this opportunity to wish my ever-committed and excellent readers a Merry Christmas in advance from all of us at Adora Trading!
As we head into the holidays at full steam, so are deep-pocketed institutional traders, who are winding down for the year—closing out positions, balancing books, and avoiding taking on new risks.
This in turn leads to reduced liquidity & volume, likely resulting in slower price delivery and high-resistance runs.
While more experienced traders may still find setups, it’s generally advisable to cut risk to the bare minimum and execute only if you can justify something clean, easy, and one-sided. Capital preservation is crucial. Avoid donating back to the market what you’ve painstakingly earned by being disciplined, knowing when to sit on your hands, and waiting for probabilities to shift in your favor.
Looking Ahead:
The new week is light on economic news drivers as we approach the holidays, with Thursday’s unemployment claims being the main highlight. Traders should anticipate tighter ranges, focus on price runs to intraday draw on liquidity, and manage risk appropriately.
Please note that this is not financial advice.
Monday:
Given that it’s the first trading day after a large range week on the indices and a Monday, it’s crucial to exercise patience and manage expectations. A medium-impact news driver at 10:00 AM is expected to inject volatility, providing price runs to algorithmic reference points at this time. The recommendation is to observe the opening range and then focus on identifying the most probable higher time-frame draw on liquidity during the 10:00 AM silver bullet.
Tuesday:
Volatility injections are anticipated in the AM session between 8:30 and 10:00 AM, coinciding with the Silver Bullet distribution hour. This is supported by multiple medium-impact news drivers expected to inject volatility, creating optimal trading opportunities. I recommend focusing on identifying the most probable higher time-frame draw on liquidity post-news release or, alternatively during the Opening Range (9:30-10:00 AM) and 10:00 AM Silver Bullet capitalizing on the volatility near the 9:30 opening bell.
Wednesday:
Bank holiday – Low volatility, avoid trading
Thursday:
The AM session following a bank holiday often presents challenges, typically characterized by consolidation and high-resistance price runs into liquidity and inefficiencies. Red & Medium-impact news drivers are expected to hit the markets between 8:30 and 11:00 AM, injecting volatility. Focus on identifying the most probable higher time-frame on draw on liquidity post-news release or, alternatively, observe the opening range into the 10 AM Silver Bullet window to frame low risk, high probability setups.
Friday:
Today presents no significant news drivers expected to inject volatility into the markets. If you haven’t met your weekly profit objectives, focus on the premarket trading hours or allow the opening range (9:30-10:00 AM) to develop, then focus on identifying the most probable higher time frame draw on liquidity during the 10 AM Silver Bullet or the PM session, should a suitable setup present itself.
Earnings Spotlight: Major Corporate Reports Unveiling This Week – Key Insights for Investors
Earnings Reports Impact: A gentle reminder to fellow traders: anticipate significant price movements surrounding earnings reports in large-cap companies. This period often presents strategic trading opportunities, capitalizing on heightened volatility for smoother trades.
The upcoming week has little to no earnings reports from large-cap institutions scheduled for release. This further reinforces what was discussed earlier in this letter—to manage risk and size down.
When the large players are conspicuously absent, it often points to something already evident: reduced liquidity and volume in the market. As traders, we rely heavily on these to frame low-risk, high-probability setups making it important to mange expectations, while preserving capital as the year winds down.
The Cot Report For The US Dollar
The previous week saw the U.S. dollar repricing rapidly into targets as your attention was taken to both in the last newsletter and on the Sunday live stream, further taking out fund-level traders buy stops and delivering into premium levels.
Notably, commercials shifted heavily net short during the week, liquidating the majority of their long hedges while significantly increasing short positions. This indicates a broader trend of profit-taking on the macro scale—a clear signal to informed traders that risk reduction is in full swing as the year comes to a close. Even the largest funds are prioritizing capital preservation, and so should you.
It’s worth noting that this action of the commercials does not suggest smart money accumulation at this stage. Instead, we will need to wait for additional data through the end of the year and into the new year to gain clarity on commercial positioning and future intentions.
What does this signify for us as traders?
Until there is alignment between the fundamentals and technicals, our primary focus will remain on institutional order flow through top-down analysis and price action for actionable insights.
Seasonal Tendencies
The US Dollar
The year is wrapping up quickly, and December is nearing its end. Seasonal data projects a consolidation or range-bound market to close the year, but this hasn’t been the case so far. Price delivery has defied expectations, driven by a unique blend of heightened volatility and various global events—providing a perfect smokescreen for manual interventions that have repriced markets into targets with unprecedented speed.
As we approach year-end, alignment between macroeconomic factors and market movements remains conspicuously absent. With major players largely sidelined for the year, institutional order flow remains the guiding principle for decision-making, providing clarity in the absence of technical-fundermental correlation.
Stay informed for sound decision-making, and always adhere to strict risk management protocols.
Until our next update, trade wisely.
Happy Trading!
Adora Trading Team
