This Week’s Economic Calendar
Into the close on Friday, we saw an average of 1% wiped off major indices, with the Dow and NASDAQ cratering approximately 500 points each, following a retracement into a premium of the range earlier in the week, allowing smart money to accumulate short positions by selling into retail buy stops before rapidly repricing into discount targets. Given institutional order flow top-down, we remain bearish on the indices until a clear break of structure gives us reason to adjust this bias heading into the new week.
Looking Ahead:
The upcoming week is data-heavy, with unemployment claims on Thursday at 8:30 AM being the key highlight. Expect notable price swings during these news releases, and look to capitalize on high-probability opportunities that form after their release.
Please note that this is not financial advice.
Monday:
Given that it’s the final trading week of both the month and the year and a Monday, it’s crucial to exercise patience and manage expectations. Medium and Red-folder news drivers at 9:45 & 10:00 AM respectively are 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:
Medium folder news drivers are expected to hit the markets at 9:00 AM, injecting volatility. As a result, today is expected to present optimal trading opportunities. I recommend focusing on identifying the most probable higher time-frame draw on liquidity 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 10:00 AM Silver Bullet window to frame low risk, high probability setups.
Friday:
Red and medium-impact news drivers are scheduled for 10:00 AM, sharp, coinciding with the Silver Bullet distribution hour. If you haven’t met your weekly profit objectives, shift your focus to identifying the most probable higher time frame draw on liquidity during the 10:00 AM Silver Bullet window 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.
Yet another week with little to no earnings reports from large-cap institutions on the schedule. With the major players absent, the focus shifts to managing expectations and preserving capital as the year draws to a close.
The Cot Report For The US Dollar
The US Dollar remained range-bound in the previous week, reflecting a lack of institutional sponsorship. We are likely to remain in this range until deep-pocketed and fund-level traders resume assuming risk, which would lead to increased volume to work with.
Commercials also remain heavily net short, showing no signs of adding new positions to their existing ones as the year unwinds. With positions already settled and an unwillingness to take on fresh risk, patience and restraint are essential. Waiting for commercials to reveal their intentions into the new year will provide the clarity needed for decisive action.
What does this signify for us as traders?
For now, we remain in observation mode, until alignment-returns between the fundamentals and technicals, our primary focus will remain on reading into institutional order flow, through top-down analysis and the understanding of price to derive actionable insights.
Seasonal Tendencies
The US Dollar
As 2024 comes to a close, January is expected to bring fresh volatility and new opportunities to capitalize on. While December was projected to be a range-bound month, the year’s recurring theme of unexpected events continued to challenge that narrative. Instead, we experienced a volatile December, reinforcing the importance of adaptability in trading to align with prevailing market conditions.
As we approach the year’s end without clear macroeconomic direction and await further information, alignment between macroeconomic factors and technicals remains absent. Until such clarity returns, institutional order flow will continue to serve as the guiding principle for decision-making, offering actionable insights amidst the lack of technical-fundamental 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
