WTF Chart of the Day: Nikkei Long Term Backfill Actions
By LawrenceNikkei weekly chart below.
Those who are familiar with market profile would notice at once we have 2 areas of concentrated volume:
1. 14000 to 15500 from years ago and then the past few months
2. 9000 to 11000 from end of year 2008 to right before the melt up actions
The void between is likely to be backfilled once the upper extreme is rejected which was done earlier this year at my STOPD Level of 200% of year 2009 range.
Next is the daily chart.
The retest of the lower high from July back in end of September was a low risk short zone as 150% expansion level failed to hold up the pullback from the July swing top which often points to the necessity to at least retest of the 150% expansion level once more. Those who read my ebook Art of Chart Reading can tell that the falling wedge and 3 pushes down patterns are asking for a retest of that swing low made in August.
Both support trend line and the original resistance trend line are sitting right underneath the current price level making it a even strong support zone.
Last one is the hourly chart.
Notice the 150% line is not positioned exactly to where it should be as I switch between resolutions in MetaTrader. It somehow moved the drawing object and the price level is off a little.
Here is where the short play becomes tricky. Notice that there is a gap down below 13400 area while a pocket above at 13600 lines up with the 150% zone and the 2 trend lines I have draw on the daily chart.
For the short side to get a home run down to the 100% expansion level, Nikkei has to stay weak and close below 14300 on daily close basis. That is the natural stop area right above the last swing high on the chart. You need trapped longs to fuel powerful sell offs. Nikkei also has to flush through the current support zone right below quickly or the sell power will be absorbed.
Late shorts will have a difficult time to hang onto their short positions if they initiate their shorts now on a panic after 2 weeks of selling. Not that many people short with a wide stop of 500 points or more. I am not saying that it will not workout. I am saying the price movement may not be directional as most short sellers would hope for.
The downside targets of current year midpoint at 13170 is still in play. so is the 100% expansion level all the way down below 11400.
The tricky question is how to engage it if you are not well positioned yet.
